VEA vs IEFA: The Soul of Index Rules

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Dear reader, let us speak of these two great instruments-VEA and IEFA-not as mere ETFs, but as vessels of human contradiction. One bears the modest cost of 0.03%, a whisper in the ear of avarice, while the other demands 0.07%, a louder whisper, yes, yet one that pays back in yield. A paradox! For what is a higher dividend, if not the market’s fleeting caress, a momentary reward before the abyss reclaims us all? VEA, broad and inclusive, embraces Canada and South Korea among the developed, as though wealth and status can be conferred by committee. IEFA, colder, more rigid, follows MSCI’s ironclad doctrine: Canada is cast out, Korea kept in limbo, excluded not by merit, but by the silent edicts of an index.

Why do we build these altars to diversification, these temples of exposure? Is it wisdom-or is it fear? Fear that our portfolios, left to our own devices, may reveal our fragility? Both funds promise the same: equities beyond America’s roaring borders. Yet their divergence is not in returns-29.1% versus 25.8% in one year, a difference that vanishes under the weight of compounding time-but in the rules they obey. A rate of 0.03% is not merely cheaper; it is an affirmation, a quiet rebellion against the priesthood of fees. And yet, 0.07% buys a yield of 2.93%, slightly higher than VEA’s 2.7%, as though the market whispers, “Pay more, and I shall bless you with crumbs.” But are they crumbs, or illusions?

Snapshot (cost & size)

Metric VEA IEFA
Issuer Vanguard IShares
Expense ratio 0.03% 0.07%
1-yr return (as of Dec. 18, 2025) 29.1% 25.8%
Dividend yield 2.7% 2.93%
Beta 1.06 1.04
AUM $260.0 billion $160.6 billion

Observe the numbers-the beta, barely above unity, trembling on the edge of conformity; the assets under management, vast, so vast they seem to press upon the soul. $260 billion in VEA! A sum greater than the GDP of nations. And yet, for all this magnitude, what do we confront? A difference of $100 billion between them, as though between two brothers, one is favored, the other neglected, though both pray to the same god: performance.

Performance & risk comparison

Metric VEA IEFA
Max drawdown (5 y) (29.71%) (30.41%)
Growth of $1,000 over 5 years $1,324 $1,284

Look upon the drawdowns: 29.71%, 30.41%. In the eyes of the broker, these are statistics. But within them lies terror-the moment when the chart plunges, when investors awake at 3 a.m., drenched in sweat, clutching their phones, asking, “Where is my money?” VEA not only lost less, but returned more: $1,324 from $1,000. A quiet victory. Yet does this absolve it? Or is it merely fate, blind and capricious, tossing coins behind the curtain of reason?

What’s inside

Let us peer deeper, into the anatomy of these souls. IEFA holds 2,593 names-stocks, yes, but also metaphors. Financial Services at 22%, a titan born of debt and trust, two things that collapse in the same storm. Industrials, 20%, the last gasp of tangible creation. Then the sacred: ASML, Roche, AstraZeneca-entities that manipulate light, cells, chemistry. Are they not the new prophets? Each under 1.18% of assets, diluted, dispersed, like souls in a crowd, none powerful enough to save us.

And VEA? It holds 3,873 names-more, always more. Canada included. Korea elevated. A broader church, but is it holier? Technology at 11%, slightly higher than IEFA’s shadowy 8% (implied, though not declared). Samsung sits there, blinking from Seoul, a digital colossus. But again, none dominant. All dispersed. All diluted. Diversification, that modern sacrament-how we comfort ourselves with it! As though by owning everything, we might escape the one truth: we own nothing.

What this means for investors

You ask, then: which to choose? Ah, but the question is wrong. It is not which-no, never that-but why. Why do you seek international exposure? Is it prudence, or cowardice? Is it faith in the market, or fear of America’s fragility?

VEA and IEFA are not rivals. They are reflections. VEA says: “The world is one.” It folds Canada into the developed, embraces Korea. A vision of inclusion, yes-but is it naïve? Or enlightened? IEFA clings to tradition. MSCI EAFE, that old construct, born in 1969, when the world was simpler. Canada? American cousin. Korea? Not quite there. This is not economics. This is dogma.

The index rules-those cold, lifeless lines of code-are our unspoken creed. They decide which nations are worthy, which economies are “developed,” as though this were a moral judgment, not a spreadsheet. And we, the investors, we kneel before them, not daring to question. We call it “alignment”-such a clean word. But alignment with what? A portfolio? Or the illusion of control?

To choose is not to compare ETFs. It is to declare your philosophy. Do you believe in borders? In hierarchies? Or do you believe in movement, in flux, in the chaos of global capital? Choose VEA, and you say: all are equal in growth. Choose IEFA, and you say: some must wait. Some are not ready.

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Glossary

ETF: A collective delusion, traded daily, believed to simplify the incomprehensible.
Expense ratio: The price of pretending you’re not gambling.
Dividend yield: A trickle of cash, offered to quiet the trembling hand.
Developed markets: Countries where the poor are invisible, and the stock exchanges gleam.
Sector weights: The balance of power among industries, constantly shifting beneath our feet.
Beta: A measure of how closely one follows the herd into the fire.
AUM: The weight of other people’s money, pressing on the soul.
Max drawdown: The moment you realize you are not in control.
Total return: The story we tell ourselves after the fact, to feel wise.
Liquidity: The illusion that you can escape when the door is still open.
Country coverage: A geopolitical fiction, updated quarterly.
Structural quirks: The hidden flaws in the machine, which we pretend do not exist.

So go, investor. Choose. But know this: the market does not care for your choice. It will rise. It will fall. It will mock your expense ratios, your yields, your beta. And in the end, when the screens go dark, only one question will remain, echoing in the silence: Did you understand yourself? 🔄

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2025-12-24 06:33