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VXUS vs. PFF: What’s The Difference?

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between VXUS and PFF? And which fund is better?

The expense ratio of VXUS is 0.38 percentage points lower than PFF’s (0.08% vs. 0.46%). VXUS also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VXUS has provided higher returns than PFF over the past ten years.

In this article, we’ll compare VXUS vs. PFF. We’ll look at industry exposure and holdings, as well as at their performance and annual returns. Moreover, I’ll also discuss VXUS’s and PFF’s portfolio growth, risk metrics, and fund composition and examine how these affect their overall returns.

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Summary

VXUSPFF
NameVanguard Total International Stock Index Fund ETF SharesiShares Preferred and Income Securities ETF
CategoryForeign Large BlendPreferred Stock
IssuerVanguardiShares
AUM404.73B19.8B
Avg. Return8.41%6.90%
Div. Yield2.44%4.47%
Expense Ratio0.08%0.46%

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.

The iShares Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

VXUS’s dividend yield is 2.03% lower than that of PFF (2.44% vs. 4.47%). Also, VXUS yielded on average 1.51% more per year over the past decade (8.41% vs. 6.90%). The expense ratio of VXUS is 0.38 percentage points lower than PFF’s (0.08% vs. 0.46%).

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Fund Composition

Industry Exposure

VXUS vs. PFF - Industry Exposure

VXUSPFF
Technology13.07%0.0%
Industrials12.94%10.27%
Energy4.55%0.0%
Communication Services7.06%0.0%
Utilities2.94%81.81%
Healthcare9.19%3.54%
Consumer Defensive7.83%0.0%
Real Estate3.79%0.65%
Financial Services17.64%0.0%
Consumer Cyclical12.64%0.0%
Basic Materials8.37%3.74%

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.

VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

VXUS is 17.64% more exposed to the Financial Services sector than PFF (17.64% vs 0.0%). VXUS’s exposure to Technology and Industrials stocks is 13.07% higher and 2.67% higher respectively (13.07% vs. 0.0% and 12.94% vs. 10.27%). In total, Real Estate, Energy, and Communication Services also make up 14.75% more of the fund’s holdings compared to PFF (15.40% vs. 0.65%).

Holdings

VXUS - Holdings

VXUS HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd1.62%
Tencent Holdings Ltd1.41%
Alibaba Group Holding Ltd Ordinary Shares1.26%
Nestle SA1.1%
Samsung Electronics Co Ltd1.05%
ASML Holding NV0.86%
Roche Holding AG0.81%
Toyota Motor Corp0.67%
LVMH Moet Hennessy Louis Vuitton SE0.61%
Novartis AG0.6%

VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.

ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

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Risk Analysis

VXUSPFF
Mean Return0.560.52
R-squared98.399.39
Std. Deviation15.127.87
Alpha0.313.45
Beta0.990.81
Sharpe Ratio0.40.72
Treynor Ratio5.146.79

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a R-squared of 98.39 with a Treynor Ratio of 5.14 and a Beta of 0.99. Its Alpha is 0.31 while VXUS’s Sharpe Ratio is 0.4. Furthermore, the fund has a Mean Return of 0.56 and a Standard Deviation of 15.12.

The iShares Preferred and Income Securities ETF (PFF) has a Alpha of 3.45 with a Mean Return of 0.52 and a Beta of 0.81. Its Treynor Ratio is 6.79 while PFF’s R-squared is 9.39. Furthermore, the fund has a Sharpe Ratio of 0.72 and a Standard Deviation of 7.87.

VXUS’s Mean Return is 0.04 points higher than that of PFF and its R-squared is 89.00 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than PFF. The Alpha and Beta of VXUS are 3.14 points lower and 0.18 points higher than PFF’s Alpha and Beta.

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Performance

Annual Returns

VXUS vs. PFF - Annual Returns

YearVXUSPFF
202011.32%7.94%
201921.58%15.62%
2018-14.42%-4.77%
201727.52%8.33%
20164.72%1.26%
2015-4.28%4.62%
2014-4.17%13.45%
201315.16%-0.59%
201218.22%18.25%
20110.0%-2.2%
20100.0%13.96%

VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% respectively.

The year 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

VXUS vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXUS$10,000$19,3158.41%
PFF$10,000$18,1896.90%

A $10,000 investment in VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.

With a $10,000 investment in PFF, the end total would have been $18,189. This equates to a $8,189 profit over 9 years and a compound annual growth rate (CAGR) of 6.90%.

VXUS’s CAGR is 1.51 percentage points higher than that of PFF and as a result, would have yielded $1,126 more on a $10,000 investment. Thus, VXUS outperformed PFF by 1.51% annually.


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