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VXUS vs. USMV: What’s The Difference?

The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between VXUS and USMV? And which fund is better?

The expense ratio of VXUS is 0.07 percentage points lower than USMV’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 USMV over the past ten years.

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

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Summary

VXUSUSMV
NameVanguard Total International Stock Index Fund ETF SharesiShares MSCI USA Min Vol Factor ETF
CategoryForeign Large BlendLarge Blend
IssuerVanguardiShares
AUM404.73B27.6B
Avg. Return8.41%13.89%
Div. Yield2.44%1.5%
Expense Ratio0.08%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 Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

VXUS’s dividend yield is 0.94% higher than that of USMV (2.44% vs. 1.5%). Also, VXUS yielded on average 5.49% less per year over the past decade (8.41% vs. 13.89%). The expense ratio of VXUS is 0.07 percentage points lower than USMV’s (0.08% vs. 0.15%).

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Fund Composition

Industry Exposure

VXUS vs. USMV - Industry Exposure

VXUSUSMV
Technology13.07%20.53%
Industrials12.94%10.51%
Energy4.55%0.21%
Communication Services7.06%11.03%
Utilities2.94%6.93%
Healthcare9.19%18.42%
Consumer Defensive7.83%12.82%
Real Estate3.79%2.73%
Financial Services17.64%9.65%
Consumer Cyclical12.64%5.53%
Basic Materials8.37%1.65%

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 Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

VXUS is 7.99% more exposed to the Financial Services sector than USMV (17.64% vs 9.65%). VXUS’s exposure to Technology and Industrials stocks is 7.46% lower and 2.43% higher respectively (13.07% vs. 20.53% and 12.94% vs. 10.51%). In total, Real Estate, Energy, and Communication Services also make up 1.43% more of the fund’s holdings compared to USMV (15.40% vs. 13.97%).

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%.

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

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Risk Analysis

VXUSUSMV
Mean Return0.560
R-squared98.390
Std. Deviation15.120
Alpha0.310
Beta0.990
Sharpe Ratio0.40
Treynor Ratio5.140

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

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Beta of 0 with a Alpha of 0 and a Mean Return of 0. Its R-squared is 0 while USMV’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.

VXUS’s Mean Return is 0.56 points higher than that of USMV and its R-squared is 98.39 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than USMV. The Alpha and Beta of VXUS are 0.31 points higher and 0.99 points higher than USMV’s Alpha and Beta.

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Performance

Annual Returns

VXUS vs. USMV - Annual Returns

YearVXUSUSMV
202011.32%5.6%
201921.58%27.77%
2018-14.42%1.36%
201727.52%18.97%
20164.72%10.5%
2015-4.28%5.5%
2014-4.17%16.34%
201315.16%25.11%
201218.22%11.04%
20110.0%0.0%
20100.0%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 USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.

Portfolio Growth

VXUS vs. USMV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VXUS$10,000$16,3388.41%
USMV$10,000$27,60713.89%

A $10,000 investment in VXUS would have resulted in a final balance of $16,338. This is a profit of $6,338 over 8 years and amounts to a compound annual growth rate (CAGR) of 8.41%.

With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.

VXUS’s CAGR is 5.49 percentage points lower than that of USMV and as a result, would have yielded $11,269 less on a $10,000 investment. Thus, VXUS performed worse than USMV by 5.49% annually.


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