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Previously I wrote this article about playing the global market with the iShares MSCI World ETF (NYSEARCA:URTH). I have been asked to compare URTH and the Vanguard Total World Stock Index ETF (NYSEARCA:VT), so I'd like to present information about both funds and provide my opinion as to which is the better play for global exposure. The next few sections will present the data that I've gathered and my opinions will be presented in the conclusion.

Geographical Breakdown

Because the iShares website for URTH and the Vanguard website for VT lists the geographical breakdown with differing titles, I ran the geographical breakdown using the Morningstar X-Ray Overview. Here are the results:

 

 

Country

VT

URTH

North America

51.37%

57.98%

Latin America

2.26%

0.01%

United Kingdom

8.01%

9.26%

Europe Developed

15.28%

17.94%

Europe Emerging

0.91%

0.00%

Africa/Middle East

1.18%

0.20%

Japan

8.05%

9.38%

Australia

3.52%

3.39%

Asia Developed

4.88%

1.77%

Asia Emerging

4.54%

0.07%

Not Classified

0.00%

0.00%

Sector Breakdown

These sector breakdowns were collected from the Vanguard and iShares website for these individual funds, respectively.

 

 

Sector

VT

URTH

Financials

22.00%

21.01%

Consumer Discretionary

11.60%

11.89%

Consumer Staples

10.10%

10.48%

Health Care

9.60%

11.38%

Information Technology

11.70%

11.31%

Industrials

11.30%

10.99%

Energy

9.30%

9.72%

Materials

6.80%

5.85%

Telecommunications

3.90%

3.77%

Utilities

3.70%

3.35%

Other

0.00%

0.26%

Top Ten Holdings

VT holds 4,997 stocks with a total of $3.4 billion in assets under management while URTH holds 1,188 with a total of $25.3 million in assets under management.

 

 

VT Holding

VT Percentage

URTH Holding

URTH Percentage

Apple, Inc. (NASDAQ:AAPL)

1.14%

Exxon Mobil (NYSE:XOM)

1.45%

Exxon Mobil (XOM)

1.11%

Apple, Inc. (AAPL)

1.40%

General Electric (NYSE:GE)

0.66%

General Electric (GE)

0.87%

International Business Machines (NYSE:IBM)

0.65%

Microsoft (NASDAQ:MSFT)

0.86%

Nestle (OTCPK:NSRGF)

0.64%

Johnson & Johnson (NYSE:JNJ)

0.85%

Chevron (NYSE:CVX)

0.63%

Google (NASDAQ:GOOG)

0.84%

Johnson & Johnson (JNJ)

0.61%

Chevron (CVX)

0.83%

Microsoft (MSFT)

0.59%

Wells Fargo (NYSE:WFC)

0.74%

Google (GOOG)

0.58%

Nestle (OTCPK:NSRGF)

0.73%

Procter & Gamble (NYSE:PG)

0.58%

JP Morgan (NYSE:JPM)

0.73%

Performance and Other Metrics

The performance data was taken from Yahoo! Finance for both funds. VT's inception data was June 23, 2008 and URTH's inception date was January 10, 2012.

 

 

Return

VT

URTH

YTD

5.47%

7.59%

1-Month

-2.66%

2.11%

3-Month

-0.61%

7.59%

1-Year

16.79%

12.93%

3-Year

12.77%

N/A

5-Year

2.80%

N/A

52-Week Range

45.09 - 55.93

49.77 - 66.12

 

 

Metric

VT

URTH

Price-to-Earnings

14

14

Price-to-Book

1.69

1.79

Dividend Yield

3.38

2.52

Return on Assets

6.59

6.64

Return on Equity

16.59

17

Expense Ratio

0.19

0.24

Turnover Rate

15.7

3

Opinion

First, I'd like to discuss my thoughts on the geographical breakdown. I'm a believer in keeping a geographical breakdown truly diversified evenly among various jurisdictions if you're going to have a global fund- versus having a huge overweighting in one jurisdiction and distribute the rest among others. Therefore, I don't like either of the funds having over 50% of their allocation in the United States and the rest allocated elsewhere. I like VT because of the lesser weighting in the United States but also a higher weighting in Latin America and the Asian Emerging and Developed markets.

Secondly, I think the sector breakdown between the two yields very little difference. However, I feel that while VT has a better diversification because of the amount of holdings in assets under management (4,997 stocks versus URTH's 1,188 stocks), URTH's smaller diversification ensures that more eggs are being placed in fewer baskets. You can look at this from the perspective that market fluctuations could be limited to only a handful of individual stocks in the sector or that by having fewer stocks selected, you're ensuring that you have the best of breed.

Third, I feel that VT has had a longer proven track record of success versus URTH. In the short term of the current year, URTH has provided a larger return. Personally, I feel more comfortable with the track record. Investors with a shorter time horizon of about a year may want to consider URTH but for investors with a time horizon longer than that would want to consider VT. Also, VT has had less of a price swing in the 52-week range compared to URTH.

Fourth, the additional metrics I've outlined under the funds' performance is almost in line. The major differences I want to highlight for consideration is the expense ratio and the dividend yield. These two metrics can take you a long way just by themselves.

Ultimately, I think VT is a better play than URTH if you want global exposure.

Source: The Global Tale Of The Tape: iShares Versus Vanguard