VEA vs EFA: What’s The Difference? 2023LAST UPDATED: July 25, 2023 | By Conrad Golly
The Vanguard FTSE Developed Markets ETF (VEA) and the iShares MSCI EAFE ETF (EFA) are both interesting ETFs. VEA tracks FTSE Developed ex US All Cap Net Tax (US RIC) Index and EFA tracks MSCI EAFE. So, what’s the difference between VEA vs EFA? And which fund is better?
VEA vs EFA: The expense ratio of VEA is 0.05% and EFA is 0.33%. VEA’s biggest holding is Nestle SA and EFA’s biggest holding is Nestle SA. Overall, VEA has provided 0.38% Higher returns than EFA over the past ten years.In this article, we’ll compare VEA vs EFA. We’ll look at holdings and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VEA’s and EFA’s industry exposure, risk metrics, fund composition and examine how these affect their overall returns.
Summary VEA vs EFA
EFA vs VEA Table
|Name||Vanguard FTSE Developed Markets ETF||iShares MSCI EAFE ETF|
|Category||Foreign Large Blend||Foreign Large Blend|
The Vanguard FTSE Developed Markets ETF (VEA) is a FTSE Developed ex US All Cap Net Tax (US RIC) Index fund that is issued by Vanguard. It currently has $161.15B total assets under management and has yielded an average annual return of 5.40% over the past 10 years. The fund has a dividend yield of 2.91% with an expense ratio of 0.05%.
The iShares MSCI EAFE ETF (EFA) is a MSCI EAFE that is issued by iShares. It currently has $48.07B total assets under management and has yielded an average annual return of 5.01% over the past 10 years. The fund has a dividend yield of 2.50% with an expense ratio of 0.33%.
VEA’s dividend yield is Higher than that of EFA (2.91% vs 2.50%). Also, VEA yielded on average 0.38% Higher per year over the past decade (5.40% vs 5.01%). The expense ratio of VEA is -0.28% percentage points Lower than EFA’s (0.05% vs 0.33%).
Fund Composition VEA vs EFA
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Industry Exposure Table vs VEA
The Vanguard FTSE Developed Markets ETF (VEA) has the most exposure to the Financial Services sector at 17.06%. This is followed by Industrials and Healthcare at 15.96% and 10.68% respectively. Utilities (2.94%), Real Estate (3.17%), and Communication Services (3.87%) only make up 9.98% of the fund’s total assets.
VEA’s middle weighted sectors is made up with moderate exposure to Energy, Basic Materials, Consumer Defensive, Consumer Cyclical, and Technology stocks at 4.92%, 7.32%, 8.02%, 10.33%, and 10.52%.
The iShares MSCI EAFE ETF (EFA) has the most exposure to the Financial Services sector at 0.1726. This is followed by Industrials and Healthcare at 0.161 and 0.1372 respectively. Real Estate (0.025), Utilities (0.0325), and Communication Services (0.0421) only make up 0.0996 of the fund’s total assets.
EFA’s middle weighted sectors is made up with moderate exposure to Energy, Basic Materials, Technology, Consumer Defensive, and Consumer Cyclical stocks at 0.0428, 0.0713, 0.0929, 10.33%, and 10.52%.
VEA is -0.20% Less exposed to the Financial Services sector than EFA (17.06% vs 17.26%). VEA’s exposure to Industrials and Healthcare stocks is -0.14% Less and -3.04% Less respectively (15.96% vs. 16.10%) and (10.68% vs. 13.72%).
In total, VEA’s bottom three industries, Communication Services, Real Estate, and Utilities also make up 0.02% Higher of the fund’s holdings compared to EFA’s bottom three industries. (9.98% vs. 0.0996).
Holdings Vanguard FTSE Developed Markets ETF (VEA)
|ASML Holding NV||1.38%|
|Samsung Electronics Co Ltd||1.22%|
|Novo Nordisk A/S Class B||1.19%|
|Roche Holding AG||1.05%|
|LVMH Moet Hennessy Louis Vuitton SE||1.02%|
|Novartis AG Registered Shares||0.91%|
|Toyota Motor Corp||0.77%|
VEA’s Top Holdings are Nestle SA, ASML Holding NV, Samsung Electronics Co Ltd, Novo Nordisk A/S Class B, and Roche Holding AG at 1.52%, 1.38%, 1.22%, 1.19%, and 1.05%.
LVMH Moet Hennessy Louis Vuitton SE (1.02%), AstraZeneca PLC (1.02%), and Shell PLC (0.91%) have a slightly smaller but still significant weight. Novartis AG Registered Shares and Toyota Motor Corp are also represented in the VEA’s holdings at 0.91% and 0.77%.
Holdings iShares MSCI EAFE ETF (EFA)
|ASML Holding NV||0.0192|
|Novo Nordisk A/S Class B||0.0176|
|LVMH Moet Hennessy Louis Vuitton SE||0.016|
|Roche Holding AG||0.0148|
|Novartis AG Registered Shares||0.013|
|HSBC Holdings PLC||0.0097|
|Toyota Motor Corp||0.0097|
VEA’s Top Holdings are Nestle SA, ASML Holding NV, Novo Nordisk A/S Class B, LVMH Moet Hennessy Louis Vuitton SE, and AstraZeneca PLC at 0.0216, 0.0192, 0.0176, 0.016, and 0.0149.
Roche Holding AG (0.0148), Novartis AG Registered Shares (0.013), and Shell PLC (0.0126) have a slightly smaller but still significant weight. HSBC Holdings PLC and Toyota Motor Corp are also represented in the ’s holdings at 0.0097 and 0.0097.
Risk Analysis VEA vs EFA
The Vanguard FTSE Developed Markets ETF has a Standard Deviation of 18.87 with a Alpha of 1.06 and a Treynor Ratio of 6.66. Its Sharpe Ratio is 0.46 while VEA’s Beta is 1.08. Furthermore, the fund has a Mean Return of 0.84 and a R-squared of 96.3.
The EFA has a R-squared of 95.45 with a Mean Return of 0.85 and a Standard Deviation of 18.93. Its Sharpe Ratio is 0.46 while EFA’s Alpha is 1.171. Furthermore, the fund has a Beta of 1.08 and a Treynor Ratio of 6.77.
Performance VEA vs EFA
Annual Returns VEA vs EFA
VEA had its best year in 2017 with an annual return of 26.42%. VEA’s worst year over the past decade yielded -15.36% and occurred in 2022. In most years the Vanguard FTSE Developed Markets ETF provided moderate returns such as in 2019, 2013, and 2012 where annual returns amounted to 31.35%, 32.39%, and 16.00% respectively.
The year 2017 was the strongest year for EFA, returning 0.251 on an annual basis. The poorest year for EFA in the last ten years was 2022, with a yield of -0.1435. Most years the iShares MSCI EAFE ETF has given investors modest returns, such as in 2019, 2013, and 2012, when gains were 27.32%, 37.70%, and 18.29% respectively.
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Performance Comparison VEA vs EFA
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VEA would have resulted in a final balance of $16,993.02. This is a profit of $6,993.02 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.07%.
With a $10,000 investment in EFA, the end total would have been $16,434.44. This equates to a $6,434.44 profit over 10 years and a compound annual growth rate (CAGR) of 5.68%.
EFA’s CAGR is -0.39% Lower than that of VEA and as a result, would have yielded -$558.59 Less on a $10,000 investment. Thus, EFA Underperformed VEA by -$55.86 annually.