The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares MSCI USA Quality Factor ETF (QUAL) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and QUAL is a iShares Large Blend fund. So, what’s the difference between VXUS and QUAL? And which fund is better?
The expense ratio of VXUS is 0.07 percentage points lower than QUAL’s (0.08% vs. 0.15%). VXUS also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VXUS has provided lower returns than QUAL over the past ten years.
In this article, we’ll compare VXUS vs. QUAL. We’ll look at annual returns and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss VXUS’s and QUAL’s industry exposure, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| VXUS | QUAL | |
| Name | Vanguard Total International Stock Index Fund ETF Shares | iShares MSCI USA Quality Factor ETF |
| Category | Foreign Large Blend | Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 404.73B | 23.93B |
| Avg. Return | 8.41% | 13.42% |
| Div. Yield | 2.44% | 1.29% |
| Expense Ratio | 0.08% | 0.15% |
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 MSCI USA Quality Factor ETF (QUAL) is a Large Blend fund that is issued by iShares. It currently has 23.93B total assets under management and has yielded an average annual return of 13.42% over the past 10 years. The fund has a dividend yield of 1.29% with an expense ratio of 0.15%.
VXUS’s dividend yield is 1.15% higher than that of QUAL (2.44% vs. 1.29%). Also, VXUS yielded on average 5.02% less per year over the past decade (8.41% vs. 13.42%). The expense ratio of VXUS is 0.07 percentage points lower than QUAL’s (0.08% vs. 0.15%).
Fund Composition
Industry Exposure
| VXUS | QUAL | |
| Technology | 13.07% | 22.52% |
| Industrials | 12.94% | 9.22% |
| Energy | 4.55% | 2.24% |
| Communication Services | 7.06% | 11.44% |
| Utilities | 2.94% | 2.41% |
| Healthcare | 9.19% | 13.22% |
| Consumer Defensive | 7.83% | 8.57% |
| Real Estate | 3.79% | 2.72% |
| Financial Services | 17.64% | 15.87% |
| Consumer Cyclical | 12.64% | 9.43% |
| Basic Materials | 8.37% | 2.35% |
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 MSCI USA Quality Factor ETF (QUAL) has the most exposure to the Technology sector at 22.52%. This is followed by Financial Services and Healthcare at 15.87% and 13.22% respectively. Basic Materials (2.35%), Utilities (2.41%), and Real Estate (2.72%) only make up 7.48% of the fund’s total assets.
QUAL’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 8.57%, 9.22%, 9.43%, 11.44%, and 13.22%.
VXUS is 1.77% more exposed to the Financial Services sector than QUAL (17.64% vs 15.87%). VXUS’s exposure to Technology and Industrials stocks is 9.45% lower and 3.72% higher respectively (13.07% vs. 22.52% and 12.94% vs. 9.22%). In total, Real Estate, Energy, and Communication Services also make up 1.00% less of the fund’s holdings compared to QUAL (15.40% vs. 16.40%).
Holdings
| VXUS Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 1.62% |
| Tencent Holdings Ltd | 1.41% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.26% |
| Nestle SA | 1.1% |
| Samsung Electronics Co Ltd | 1.05% |
| ASML Holding NV | 0.86% |
| Roche Holding AG | 0.81% |
| Toyota Motor Corp | 0.67% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.61% |
| Novartis AG | 0.6% |
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%.
| QUAL Holdings | Weight |
| Facebook Inc Class A | 4.77% |
| Nike Inc Class B | 4.05% |
| Microsoft Corp | 3.54% |
| Apple Inc | 3.52% |
| Johnson & Johnson | 2.99% |
| BlackRock Inc | 2.87% |
| Target Corp | 2.8% |
| Mastercard Inc Class A | 2.72% |
| NVIDIA Corp | 2.71% |
| Alphabet Inc Class A | 2.49% |
QUAL’s Top Holdings are Facebook Inc Class A, Nike Inc Class B, Microsoft Corp, Apple Inc, and Johnson & Johnson at 4.77%, 4.05%, 3.54%, 3.52%, and 2.99%.
BlackRock Inc (2.87%), Target Corp (2.8%), and Mastercard Inc Class A (2.72%) have a slightly smaller but still significant weight. NVIDIA Corp and Alphabet Inc Class A are also represented in the QUAL’s holdings at 2.71% and 2.49%.
Risk Analysis
| VXUS | QUAL | |
| Mean Return | 0.56 | 0 |
| R-squared | 98.39 | 0 |
| Std. Deviation | 15.12 | 0 |
| Alpha | 0.31 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.4 | 0 |
| Treynor Ratio | 5.14 | 0 |
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Sharpe Ratio of 0.4 with a Treynor Ratio of 5.14 and a Standard Deviation of 15.12. Its Alpha is 0.31 while VXUS’s Beta is 0.99. Furthermore, the fund has a R-squared of 98.39 and a Mean Return of 0.56.
The iShares MSCI USA Quality Factor ETF (QUAL) has a R-squared of 0 with a Mean Return of 0 and a Beta of 0. Its Standard Deviation is 0 while QUAL’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.
VXUS’s Mean Return is 0.56 points higher than that of QUAL and its R-squared is 98.39 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than QUAL. The Alpha and Beta of VXUS are 0.31 points higher and 0.99 points higher than QUAL’s Alpha and Beta.
Performance
Annual Returns
| Year | VXUS | QUAL |
| 2020 | 11.32% | 16.96% |
| 2019 | 21.58% | 34.14% |
| 2018 | -14.42% | -5.77% |
| 2017 | 27.52% | 22.26% |
| 2016 | 4.72% | 9.18% |
| 2015 | -4.28% | 5.56% |
| 2014 | -4.17% | 11.62% |
| 2013 | 15.16% | 0.0% |
| 2012 | 18.22% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 2019 was the strongest year for QUAL, returning 34.14% on an annual basis. The poorest year for QUAL in the last ten years was 2018, with a yield of -5.77%. Most years the iShares MSCI USA Quality Factor ETF has given investors modest returns, such as in 2010, 2015, and 2016, when gains were 0.0%, 5.56%, and 9.18% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VXUS | $10,000 | $14,187 | 8.41% |
| QUAL | $10,000 | $23,251 | 13.42% |
A $10,000 investment in VXUS would have resulted in a final balance of $14,187. This is a profit of $4,187 over 7 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in QUAL, the end total would have been $23,251. This equates to a $13,251 profit over 7 years and a compound annual growth rate (CAGR) of 13.42%.
VXUS’s CAGR is 5.02 percentage points lower than that of QUAL and as a result, would have yielded $9,064 less on a $10,000 investment. Thus, VXUS performed worse than QUAL by 5.02% annually.
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