Vanguard VEA Review: 19 Key Things You Should Know About This ETF

Milan Kovacevic May 03, 2018

In this VEA Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA) review, we’ll address key questions our readers have been asking us about this ETF (such as VEA holdings, VEA price history, VEA dividend yield, VEA expense ratio and alternatives--VEA vs. VXUS, VEA vs. VEU, VEA vs. VTI, VEA vs. IEFA, VEA vs. VOO, VEA vs. VGK, VEA vs. EFA, VEA vs. VWO, and VEA vs. SCHF), beyond what you can normally find on Morningstar.  We'll also address some of the popular questions about VEA asked on the Bogleheads forum. 

VEA is a top 3 international (ex-US) fund by assets and is hugely popular among individual investors.  It's an exchange-traded fund (ETF), requiring no minimum investment.

Here are the topics we'll cover in this review:

  1. VEA ETF profile

  2. VEA underlying index

  3. VEA holdings

  4. VEA returns and VEA performance

  5. VEA price history

  6. VEA expense ratio

  7. VEA tax efficiency / tax-cost ratio

  8. VEA Beta / volatility / risk

  9. VEA Sharpe ratio / risk-adjusted performance

  10. VEA dividend yield

  11. VEA vs VOO

  12. VEA vs VGK

  13. VEA vs VTI

  14. VEA vs EFA

  15. VEA vs SCHF

  16. VEA vs VWO

  17. VEA vs IEFA

  18. VEA vs VXUS

  19. VEA vs VEU

So let’s start.  Scroll down to a question that interests you the most. 

1. What is VEA?

VEA is an ETF that tracks the performance of stocks issued by companies headquartered in the major European and Asia-Pacific markets. VEA employs an indexing investment approach, just like many other ETFs do.

2. What is the underlying index for VEA?

It is FTSE (Financial Times Stock Exchange) Developed All Cap ex-US Index.  It includes major European and Asian stocks and excludes those from the US (hence it's called ex-US).   

3. How many stocks does VEA have as its holdings?

VEA has over 3,800 holdings.

The top 10 holdings represent 8.76% of total VEA assets.  Here are the top holdings.

Name

Symbol

% Assets

Nestle SA

NSRGF

1.34

Novartis AG

NVSEF

1.03

Samsung Electronics Co Ltd

SSNLF.KS

1.02

HSBC Holdings PLC

HBCYF.L

1.02

Roche Holding AG Dividend Right Cert.

RHHVF

0.91

Toyota Motor Corp

TOYOF

0.8

British American Tobacco PLC

BTAFF.L

0.71

Royal Dutch Shell PLC Class A

RYDAF.L

0.69

BP PLC

BPAQF.L

0.63

Total SA

TTFNF.PA

0.61

 

4. How did VEA perform historically?

VEA has generated the following historical returns:

  • 1-month return is -5.11%;

  • 3-month return is 1.04%;

  • 1-year return is 19.94%;

  • 3-year return is 6.33%;

  • 5-year return is 7.48%.

5.  Show me VEA price history.

Over the last 5 years, VEA hit the bottom of 24.38, and it peaked at 47.88.  View the price chart below.

6. What is VEA expense ratio?

VEA expense ratio is 0.07%. The expense ratio of a fund is the total percentage of fund assets used for administrative, management, and all other expenses.

This expense ratio level is relatively low.  It's one of the lowest among international ETFs.  

7. What is VEA tax efficiency (tax-cost ratio)?

VEA tax-cost ratio is 0.78%. The tax-cost ratio measures how much a fund’s annualized return is diminished by the taxes investors pay on distributions. ETFs like VEA regularly distribute dividends and capital gains.

8. What is VEA beta? How would you assess the risk of investing in VEA?

The 3-year beta for VEA is 0.91.  Beta is a measure of volatility, or systematic risk, of a fund in comparison to the market as a whole. S&P 500 Beta is equal to 1. A Beta higher than 1 means riskier than the market overall; conversely, lower than 1 means less risky than the market.

You can make a claim that VEA is 9% less volatile than S&P 500 (the US large cap market).

9. What is VEA Sharpe ratio?

The 3-year Sharpe ratio for VEA is 0.88. The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

The fact that VEA has a lower risk-adjusted return than US large-cap index funds doesn't mean that you should not invest in it.  In fact, we recommend that a certain percentage of your investment assets be allocated to international funds (VEA is just one of the options).   

10.  What is VEA dividend yield?

The trailing 12-month dividend for VEA is $1.25.  Assuming the VEA price (at the time of this writing) of $45.04, the dividend yield is 2.78%.   

Below is the chart of the most recent dividend payments for VEA that includes ex/effective date, cash amount, declaration, record, and payment date.

11. Compare and contrast: VEA vs VOO (VOO vs VEA).

VOO is focused on large US stocks (and tracks S&P 500), while VEA is a total market ETF that focuses on stocks from other developed countries, excluding the US.  

VOO covers roughly 500 stocks, while VEA has over 3,800 holdings. 

VOO is slightly cheaper than VEA: 0.04% vs. 0.07%.  

Performance-wise, VOO did better than VEA; however, their focus is completely different and we recommend owning both international and US ETFs in your ETF portfolio.    

Below is a detailed comparison table between VEA and VOO.


VEA

VOO

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: U.S. - Large Cap

Net Assets

$71.17B

$90.22B

Expense Ratio

0.07%

0.04%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

S&P 500

YTD Return

-0.60%

1.65%

1-Year Return

19.94%

17.08%

3-Year Return

6.33%

11.11%

5-Year Return

7.48%

14.69%

1-Year Tax Cost Ratio

0.82%

0.45%

A little more about VOO: This fund tracks the performance of S&P 500. The ETF replicates S&P 500 by investing all of its assets in the stocks that make up the Index with the same approximate market-cap weightings as the Index.



12. Compare and contrast: VEA vs VGK (VGK vs VEA).

VGK seeks to match the performance of the FTSE Developed Europe Index.   VGK net assets are $19.63B, and its expense ratio is 0.10%, slightly higher than VEA's.  

VEA, on the other hand, focuses on all developed countries outside the US.  VEA has around 3,800 holdings, while VGK has around 1,250.

Over the last one, three and five years, VGK has performed slightly better than VEA, but that should not be a sole reason for selecting this ETF.  

Here is the full comparison between VEA and VGK:


VEA

VGK

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Developed Europe - Total Market

Net Assets

$71.17B

$19.63B

Expense Ratio

0.07%

0.10%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

FTSE Developed Europe All Cap Index (Net TR US RIC)

YTD Return

-0.60%

5.63%

1-Year Return

19.94%

30.27%

3-Year Return

6.33%

9.24%

5-Year Return

7.48%

7.74%

1-Year Tax Cost Ratio

0.82%

0.75%

 

Here are the top holdings represented in the VGK ETF: 


13. Compare and contrast: VEA vs VTI (VTI vs VEA).

VTI tracks the performance of a benchmark index that measures the return of the overall US stock market. This ETF's underlying index is CRSP US Total Market Index.

VTI's focus is the US, while VEA's focus is international (more specifically, developed countries outside the US).  

Both ETFs are highly diversified: VTI has over 3,500 holdings, while VEA has over 3,800.  

VTI is slightly cheaper than VEA (0.04% vs. 0.07%).  

VTI has performed better historically than VEA, but that should not be a sole reason for selecting it.  

Below is a comprehensive comparison table between VEA and VTI.


VEA

VTI

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: U.S. - Total Market

Net Assets

$71.17B

$94.96B

Expense Ratio

0.07%

0.04%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

CRSP US Total Market Index

YTD Return

-0.60%

1.28%

1-Year Return

19.94%

16.23%

3-Year Return

6.33%

10.56%

5-Year Return

7.48%

14.35%

1-Year Tax Cost Ratio

0.82%

0.43%

 

14. Compare and contrast: VEA vs EFA (EFA vs VEA).

EFA tracks securities in developed European, Australasian and Far-Eastern markets, as measured by the MSCI EAFE Index. The Index has been developed by MSCI as an equity benchmark for its international stock performance and covers only developed markets.  It excludes the US and Canada, and small-cap stocks.  

VEA is based on FTSE (Financial Times Stock Exchange) Developed All Cap ex-US Index. 

EFA's issuer is Blackrock (iShares), whereas VEA comes from the Vanguard family.

EFA is substantially more expensive than VEA (0.32% vs. 0.07% expense ratio) and has fewer holdings (~900 vs. 3,800).  

The historical performance of VEA and EFA is comparable.  

Below is a detailed comparison table between VEA and EFA.


EFA

VEA

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Developed Markets Ex-U.S. - Total Market

Net Assets

$80.29B

$71.17B

Expense Ratio

0.32%

0.07%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

MSCI EAFE Index

FTSE Developed All Cap ex US Index Net TR US RIC

YTD Return

-0.06%

-0.60%

1-Year Return

19.62%

19.94%

3-Year Return

5.45%

6.33%

5-Year Return

6.89%

7.48%

1-Year Tax Cost Ratio

0.65%

0.82%

 

15. Compare and contrast: VEA vs SCHF (SCHF vs VEA).

SCHF seeks broad exposure to international large-and mid-cap companies in over 20 developed international markets. It tracks the FTSE Developed ex U.S. Index made up of approximately 1,400 international stocks.

VEA's coverage is broader than SCHF's: it includes 3,800 stocks vs. ~1,400 for SCHF.  VEA includes a greater number of small-cap stocks than SCHF.

SCHF is slightly cheaper than VEA: 0.06% vs. 0.07%.

The two funds have comparable performance, VEA's returns are slightly higher than SCHF's.  

Below is a detailed comparison table between VEA and SCHF.


SCHF

VEA

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Developed Markets Ex-U.S. - Total Market

Net Assets

$14.78B

$71.17B

Expense Ratio

0.06%

0.07%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed ex-US Index

FTSE Developed All Cap ex US Index Net TR US RIC

YTD Return

-0.73%

-0.60%

1-Year Return

19.50%

19.94%

3-Year Return

5.85%

6.33%

5-Year Return

6.77%

7.48%

1-Year Tax Cost Ratio

1.00%

0.82%

 

16. Compare and contrast: VEA vs VWO (VWO vs VEA).

VWO tracks FTSE Emerging Markets All Cap China A Inclusion Index that measures the return of stocks issued by companies located in emerging markets, including China.

VEA focuses on developed markets outside the US, while VWO covers emerging markets.  

Both ETFs have a large number of holdings--roughly 3,800.  

VWO has a higher expense ration than VEA: 0.14% vs. 0.07%.

VEA has performed better than VWO in the long run, but worse in the short term.   However, that should not be a sufficient reason for selecting one over the other, since the two ETFs have two completely different focuses.   

Below is a detailed comparison table between VEA and VWO.


VEA

VWO

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Emerging Markets - Total Market

Net Assets

$71.17B

$70.75B

Expense Ratio

0.07%

0.14%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

FTSE Emerging Markets All Cap China A Inclusion Index Net TR US RIC

YTD Return

-0.60%

8.56%

1-Year Return

19.94%

34.96%

3-Year Return

6.33%

10.55%

5-Year Return

7.48%

5.07%

1-Year Tax Cost Ratio

0.82%

0.80%

 

17. Compare and contrast: VEA vs IEFA (IEFA vs VEA).

IEFA tracks the MSCI EAFE Investable Market Index. This Index is designed to measure large-, mid-, and small-cap stocks from Europe, Australasia, and the Far East.

IEFA issuer is BlackRock, while VEA's underwriter is Vanguard.  

IEFA has around 2,500 holdings, whereas VEA has around 3,800.  VEA is more broadly diversified.   

Performance wise, these two funds are fairly comparable, although IEFA has done somewhat better over the course of last 5 years. 

The expense ratios of IEFA and VEA are similar: IEFA charges 0.08%, while VEA charges 0.07%.  

Below is a detailed comparison table between VEA and IEFA.


IEFA

VEA

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Developed Markets Ex-U.S. - Total Market

Net Assets

$52.42B

$71.17B

Expense Ratio

0.08%

0.07%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

MSCI EAFE Investable Market Index

FTSE Developed All Cap ex US Index Net TR US RIC

YTD Return

0.08%

-0.60%

1-Year Return

20.98%

19.94%

3-Year Return

6.54%

6.33%

5-Year Return

7.71%

7.48%

1-Year Tax Cost Ratio

0.72%

0.82%

 

18. Compare and contrast: VEA vs VXUS (VXUS vs VEA).

VXUS tracks the performance of the FTSE Global All Cap ex US Index, a market capitalization weighted index designed to measure market performance of companies located in developed and emerging markets, excluding the United States.

VEA, on the other hand, tracks performance companies located only in developed markets outside the US.  

VXUS covers over 7,700 holdings, while VEA has around 3,800 holdings.   

Performance wise, these two funds are comparable, although VXUS has more recently generated better returns than VEA.  This has been particularly pronounced in the last 3 years.  

VXUS is slightly more expensive than VEA: its expense ratio is 0.11% vs. 0.07% for VEA.  

Below is a comparison table between VEA and VXUS.



VEA

VXUS

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Global Ex-U.S. - Total Market

Net Assets

$71.17B

$11.23B

Expense Ratio

0.07%

0.11%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

FTSE Global All Cap ex US Net US RIC

YTD Return

-0.60%

5.72%

1-Year Return

19.94%

29.47%

3-Year Return

6.33%

10.51%

5-Year Return

7.48%

7.60%

1-Year Tax Cost Ratio

0.82%

1.01%

 

19. Compare and contrast: VEA vs VEU (VEU vs VEA).

VEU tracks the performance of companies located in developed and emerging markets around the world. The Fund's underlying index is FTSE/(R)/ All-World ex USA Index, which is a market-cap-weighted index of large- and mid-cap non-US stocks.

VEA focuses on developed non-US markets only.  

VEU has around 5,400 holdings, while VEA covers approximately 3,800 stocks. 

Below is a detailed comparison between VEA and VEU.


VEA

VEU

Segment

Equity: Developed Markets Ex-U.S. - Total Market

Equity: Global Ex-U.S. - Total Market

Net Assets

$71.17B

$23.87B

Expense Ratio

0.07%

0.11%

Management Style

passive (index-based)

passive (index-based)

Underlying Index

FTSE Developed All Cap ex US Index Net TR US RIC

FTSE All World ex US Net TR US RIC

YTD Return

-0.60%

5.70%

1-Year Return

19.94%

29.30%

3-Year Return

6.33%

10.40%

5-Year Return

7.48%

7.44%

1-Year Tax Cost Ratio

0.82%

0.78%

 

If you're looking for additional ideas for Vanguard ETF investing, you may want to watch this Youtube video:


We hope this review has given you a perspective on VEA performance (returns, expenses, dividend yield) and alternative choices (VEA vs. VXUS, VEA vs. VEU, VEA vs. VTI, VEA vs. IEFA, VEA vs. VOO, VEA vs. VGK, VEA vs. EFA, VEA vs. VWO, and VEA vs. SCHF).

If you have any questions or comments, send us an email at: hi [at] finstead [dot] com.

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