iShares Core MSCI EAFE ETF (IEFA) Focuses on Developed Markets While Vanguard FTSE All-World ex-US ETF (VEU) Looks Globally

Vanguard FTSE All-World ex-US ETF (NYSEMKT:VEU) offers broad exposure to developed and emerging non-U.S. equity markets, aiming to track the FTSE All-World ex-US Index.

The iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) tracks developed markets outside the U.S. and Canada, with a focus on large-, mid-, and small-cap companies.

Here's how their core differences stack up.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500, with all calculations using calendar-day windows for consistency.

IEFA charges a slightly higher expense ratio but provides a slightly higher dividend yield of 2.9%. The difference in cost is modest, though the income-focused may notice IEFA's marginally higher payout.

Performance & risk comparison

What's inside

IEFA focuses on developed markets in Europe, Australasia, and the Far East, excluding U.S. and Canadian stocks.

Its portfolio leans into Financial Services (22%), Industrials (20%), and Healthcare (10%) sectors, with 2,611 holdings.

Top positions include ASML, SAP, and Nestlé.

With a 13-year track record and absence of unusual features, it keeps it straightforward for those seeking developed-market exposure.

VEU, by contrast, casts a wider net, covering both developed and emerging markets.

Its sector allocation leans toward Financial Services (25%), Industrials (15%), and Technology (14%), based on the most recent data available as of October 28, 2025.

The fund's top holdings -- Taiwan Semiconductor Manufacturing, Tencent, and Alibaba -- reflect this broader reach, especially into Asia's major firms.

For more guidance on ETF investing, check out the full guide at this link.

Foolish take

Vanguard FTSE All-World ex-US ETF (VEU) and iShares Core MSCI EAFE ETF (IEFA) have delivered very similar total returns since 2012, with IEFA rising 162% and VEU increasing 142%.

Overall, they have a very similar profile. In fact, six of their top ten holdings are the same companies: ASML, HSBC, SAP, Novartis, Roche, and Nestlé.

That said, Taiwan Semiconductor is VEU's largest position with a 3% allocation, so uber-conservative investors may not want this exposure due to the company's geopolitical risk.

Furthermore, while IEFA's expense ratio is slightly higher at 0.07% versus 0.04% -- still quite low, though -- its dividend yield is a bit higher at 2.9%, compared to VEU's 2.7%.

On top of this, IEFA has grown its dividend payments by 10.5% annually over the last five years, whereas VEU has delivered growth of 8.6%. These more appealing dividend figures may be enough to sway income investors over to IEFA, which is the ETF I would choose between the two.

Glossary

ETF: Exchange-traded fund; a pooled investment fund traded on stock exchanges like a stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its shareholders.
Dividend yield: Annual dividends paid by a fund divided by its current share price, expressed as a percentage.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
AUM: Assets Under Management; the total market value of assets a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from the fund's peak value to its lowest point over a specified period.
Developed markets: Countries with advanced economies and established financial markets, such as Japan, the UK, and Germany.
Emerging markets: Nations with developing economies and financial systems, often offering higher growth potential but more risk.
Sector allocation: The distribution of the fund's investments across different industry sectors, like technology or healthcare.
Holdings: The individual stocks or assets owned within a fund or portfolio.
Issuer: The company or financial institution that creates and manages an investment fund.
Track record: The historical performance and longevity of a fund since its inception.

Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.