VEA vs EFA: Head-to-Head Comparison

Side-by-Side Comparison

Key Differences Between VEA and EFA

VEA (Vanguard FTSE Developed Markets ETF) is a international developed fund managed by Vanguard. VEA provides broad exposure to stocks in developed countries outside the United States, including companies in Europe, Japan, Australia, and Canada. With over 4,000 holdings, it is one of the most diversified international ETFs available. Beginners choose VEA to add international developed market exposure to their portfolios at an incredibly low cost of just 0.05%.

EFA (iShares MSCI EAFE ETF) is a intl developed fund managed by BlackRock. EFA tracks the MSCI EAFE Index, covering large and mid-cap stocks in developed markets across Europe, Australasia, and the Far East, excluding the U.S. and Canada. It is one of the oldest and most widely held international ETFs, serving as a benchmark for international developed market performance. The fund provides exposure to global blue-chip companies like Nestle, Toyota, and ASML.

The most notable differences are in fees (0.05% vs 0.32%), number of holdings (4,050 vs 780), and 5-year returns (6.50% vs 6.00%).

Holdings Overlap Analysis

VEA and EFA share 54% of their top holdings. There is moderate overlap, so owning both provides some additional diversification but with diminishing returns.

Cost Comparison Over Time

If you invest $10,000 and hold for 20 years (assuming 8% annual returns):

Over 20 years, the fee difference amounts to $2,256 on a $10,000 investment. VEA saves you more in fees over time.

Which One Should a Beginner Choose?

Choose VEA if: You want investors who want developed market international exposure without emerging markets, cost-conscious investors seeking the cheapest way to diversify outside the u.s., portfolio builders who want to pair vea with a separate emerging markets fund like vwo. It's managed by Vanguard with an expense ratio of 0.05%.

Choose EFA if: You want investors who want the most established and liquid international developed market etf, tactical allocators who want to separate developed and emerging market exposures, advisors and institutions who benchmark international performance to the msci eafe index. It's managed by BlackRock with an expense ratio of 0.32%.

Can You Own Both VEA and EFA?

With 54% holdings overlap, owning both means you're essentially doubling down on the same stocks. For beginners, we recommend picking one to keep things simple. If you want more diversification, consider pairing your choice with an international ETF like VXUS or a bond ETF like BND instead.

Frequently Asked Questions