iShares Core MSCI EAFE ETF (IEFA) Offers Less Coverage Than Vanguard FTSE Developed Markets (VEA) at a Higher Cost
Key Points
IEFA and VEA both offer broad developed-market coverage.
However, IEFA excludes Canada and carries a higher fee.
Meanwhile, VEA spans more stocks at a lower cost.
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Vanguard FTSE Developed Markets ETF (VEA) vs. iShares Core MSCI EAFE ETF (IEFA): Cost, Coverage, and Key Differences
Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) and iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) are popular, low-cost ways to access developed-market stocks outside the U.S.
Both funds hold thousands of companies, track well-known indexes, and appeal to investors seeking international diversification.
Here's how they compare.
Snapshot (cost & size)
| Metric | VEA | IEFA |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.03% | 0.07% |
| 1-yr return (as of Oct. 31, 2025) | 21.7% | 19.4% |
| Dividend yield | 2.8% | 2.9% |
| Beta | 1.08 | 1.07 |
| AUM | $250.8 billion | $156.9 billion |
Beta measures price volatility relative to the S&P 500; figures use five-year weekly returns.
VEA looks more affordable with its lower expense ratio, but IEFA offers a slightly higher payout.
The fee difference may appeal to cost-conscious investors, while those seeking a marginally higher yield could lean toward IEFA.
Performance & risk comparison
| Metric | VEA | IEFA |
|---|---|---|
| Max drawdown (5 y) | -29.71% | -30.41% |
| Growth of $1,000 over 5 years | $1,527 | $1,498 |
What's inside
IEFA targets developed markets outside the U.S. and Canada, with 2,611 holdings as of its 13th year (2025), tracking an index that excludes the U.S. and Canada.
Financial Services (22%), Industrials (20%), and Healthcare (10%) dominate sector exposure.
The ETF's top positions include ASML, SAP, and AstraZeneca PLC.
There are no notable quirks or overlays in its approach.
VEA, by contrast, covers developed markets, including Canada, and holds 3,873 stocks.
Top holdings include ASML, Samsung Electronics, and SAP.
Both ETFs offer diversified international exposure, but VEA's broader reach may appeal to those seeking more comprehensive coverage.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
Despite their subtle differences, IEFA and VEA are a lot alike. In fact, seven of their top ten holdings are the same.
Furthermore, both stocks are home to thousands of publicly traded non-U.S. stocks.
Thanks to these similar offerings, it isn't hard to believe that VEA and IEFA have delivered very similar total returns since 2012, rising 165% and 162%, respectively, over that time.
Since these fund holdings -- and their returns are so similar -- I would opt for the VEA as its expense ratio is less than half of IEFAs (though both are very low).
While IEFA may look slightly more appealing to income investors with its marginally higher dividend yield, it is only 0.1 percentage points higher.
Furthermore, VEA's dividend has grown by 12% annually over the last five years, whereas IEFA's has trailed narrowly behind at 11%. Ultimately, the differences in dividend payouts look virtually negligible.
All in all, both ETFs are solid routes to take for an investor looking to gain exposure to international stocks. But, VEA gets the nod from me, with its lower expense ratio being the tiebreaker.
Glossary
ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating expenses.
Dividend yield: The annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of an investment's volatility compared to the overall market; values above 1 are more volatile.
AUM (Assets Under Management): The total market value of assets that a fund or investment company manages on behalf of clients.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Developed markets: Countries with advanced economies, stable governments, and established financial markets, such as Japan, the UK, and Canada.
Index: A benchmark that tracks the performance of a group of securities, used to measure or replicate market segments.
Sector exposure: The proportion of a fund's assets invested in specific industry sectors, like Financial Services or Healthcare.
Holdings: The individual securities, such as stocks or bonds, owned by a fund or portfolio.
International diversification: Investing across multiple countries to reduce risk and increase exposure to global opportunities.
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard FTSE Developed Markets ETF. The Motley Fool has a disclosure policy.
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