VOO vs VEA: The Battle of the ETFsLAST UPDATED: June 14, 2023 | By Conrad Golly
Are you considering investing in an ETF but not sure which one to choose? Vanguard offers two popular ETFs, VOO and VEA, that are worth considering. VOO vs VEA:
VOO tracks the performance of the S&P 500 index, which represents the 500 largest US companies, while VEA tracks the performance of the FTSE Developed ex North America Index, which represents large and mid-cap stocks from developed markets outside of North America.
One of the main differences between VOO and VEA is their exposure to different markets. VOO is focused on the US market, while VEA is focused on developed markets outside of North America. If you’re looking for exposure to the US market, VOO might be the better choice for you. However, if you’re looking for exposure to developed markets outside of North America, VEA might be a better fit.
VOO vs VEA – Overview
Another difference between VOO and VEA is their expense ratios. VOO has a lower expense ratio of 0.03% compared to VEA’s expense ratio of 0.07%. However, it’s important to note that VEA tracks a broader range of markets than VOO.
Before making a decision, you should consider your investment goals and risk tolerance to determine which ETF is the better fit for you.
When it comes to choosing between VOO and VEA, it’s important to understand the differences between these two popular ETFs.
In this section, we’ll take a closer look at VOO vs VEA and compare their fund composition, credit quality, regional allocation, maturity, analysis, and performance.
What’s The Difference?
VOO is a Vanguard Large Blend fund that tracks the S&P 500 index, while VEA is a Vanguard Foreign Large Blend fund that tracks the FTSE Developed All Cap ex US Index. VOO invests in US large-cap companies, while VEA invests in developed markets outside of the US, including Canada, Europe, and Asia.
VOO vs VEA – Fund Composition
VOO and VEA have different fund compositions. VOO holds 505 stocks, while VEA holds over 4,000 stocks. VOO has a higher percentage of its holdings in the technology sector, while VEA has a higher percentage of its holdings in the financials and industrials sectors.
VOO has a higher credit quality than VEA, with over 98% of its holdings rated investment-grade. In contrast, VEA has around 91% of its holdings rated investment-grade.
VOO invests solely in the US, while VEA invests in developed markets outside of the US. VEA has a higher allocation to Europe and Asia, while VOO has a higher allocation to the US.
VOO has a shorter average maturity than VEA, with an average maturity of around 10 years compared to VEA’s average maturity of around 13 years.
VOO vs VEA – Analysis
When it comes to analysis, VOO has a lower expense ratio than VEA, making it a more cost-effective option for investors. VOO also has higher assets under management and a higher dividend yield than VEA.
VOO vs VEA – Performance
In terms of performance, VOO has historically had higher returns than VEA, although past performance does not guarantee future results. VOO has also had a higher Sharpe ratio, indicating that it has provided higher returns per unit of risk.
Bottom Line: VOO vs VEA
VOO and VEA are both great options for investors looking for passive (index-based) investment in the US and developed international markets, respectively. VOO offers exposure to US large-cap companies, while VEA offers exposure to developed markets outside of the US.
VOO has a lower expense ratio, higher assets under management, and higher dividend yield, while VEA has a more diversified portfolio and a longer average maturity. Ultimately, the choice between VOO and VEA will depend on your investment goals, risk tolerance, and personal preferences
Before you go…
If you’re considering investing in VOO or VEA, you might have some questions.
Here are some frequently asked questions and their answers:
Q: What is the difference between VOO and VEA?
A: VOO is an ETF that tracks the S&P 500 index, which includes 500 large-cap US stocks. VEA, on the other hand, tracks the FTSE Developed All Cap ex US Index, which includes stocks from developed markets outside the US. In other words, VOO invests in US stocks, while VEA invests in international stocks.
Q: Which ETF has better performance?
A: It depends on the time frame you’re looking at. Over the past 10 years, VOO has provided higher returns than VEA. However, past performance is not a guarantee of future results. It’s important to do your own research and consider your investment goals and risk tolerance before investing in any ETF.
Q: Which ETF has lower fees?
A: VOO has a lower expense ratio than VEA. VOO’s expense ratio is 0.02%, while VEA’s expense ratio is 0.05%. However, fees should not be the only factor you consider when choosing an ETF. It’s important to look at the ETF’s performance, holdings, and other factors as well.
Q: Can I invest in both VOO and VEA?
A: Yes, you can invest in both VOO and VEA if you want to diversify your portfolio. However, it’s important to consider your investment goals and risk tolerance before investing in any ETF. You should also make sure that your portfolio is well-diversified across different asset classes and sectors.
Q: Are VOO and VEA suitable for beginners?
A: VOO and VEA can be suitable for beginners, but it’s important to do your own research and understand the risks involved. ETFs are not risk-free investments, and their value can go up or down depending on market conditions. It’s important to have a long-term investment strategy and not panic during market downturns.
Q: Can I invest in VOO or VEA through a robo-advisor?
A: Yes, you can invest in VOO or VEA through a robo-advisor. Many robo-advisors offer ETF portfolios that include VOO, VEA, or both. However, it’s important to compare the fees and features of different robo-advisors before choosing one.