The 5 Largest Developed Market ETFs (EFA, VEA)

Developed-market exchange-traded funds (ETFs) can help investors gain relatively cheap, broad diversification through access to hundreds or thousands of individual holdings across the world's most advanced economies. Here, we take a look at the five largest developed-market ETFs in terms of assets under management (AUM). 

A developed market belongs to a highly productive, industrialized country with an established rule of law. Beyond the United States, developed markets include Japan, the United Kingdom, France, Canada, and Australia. To differentiate developed-market ETFs from basic-domestic ETFs and other niches, the following list focuses on ETFs with at least 5% exposure to two or more developed market economies, excluding the United States. 

1. Vanguard FTSE Developed Markets ETF (VEA)

AUM: $170.5 billion (as of November 30, 2023)

Launched in 2007, the Vanguard FTSE Developed Markets ETF seeks to track the FTSE Developed All Cap ex-US Index, which measures the investment return of stocks issued by companies in Canada and the major markets of Europe and the Pacific region. In fact, European stocks make up over half of the fund's portfolio at 53.60%. The Vanguard FTSE Developed Markets ETF previously excluded Canadian stocks, but it eventually switched policies to incorporate important trends in North America. The passively managed fund's expense ratio is 0.05%.

2. iShares Core MSCI EAFE ETF (IEFA)

AUM: $104.8 billion (as of January 6, 2024)

Launched in 2012, BlackRock's iShares Core MSCI EAFE ETF seeks to track the MSCI EAFE Investable Market Index (IMI), which is similar to the MSCI EAFE Index, but larger and more comprehensive. The index includes small-capitalization representation in addition to the mid-cap and large-cap representation that the MSCI EAFE Index offers.

The fund's top exposure looks similar to that of the iShares MSCI EAFE ETF, with about 24% of its assets devoted to equities in Japan, about 15% to those in the United Kingdom, with France, Switzerland, Germany, and Australia each representing more than 7% of the fund's assets. The iShares Core MSCI EAFE ETF's expense ratio is competitive with that of Vanguard FTSE Developed Markets ETF's, at 0.07%.

3. Vanguard Total International Bond ETF (BNDX)

AUM: $88.5 billion (as of November 30, 2023)

The Vanguard Total International Bond ETF (BNDX) is an investment fund that seeks to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index. This index provides a broad-based measure of the global, investment-grade, fixed-rate debt markets.

The fund does employ hedging strategies that seek to mitigate uncertainty in exchange rates. It's also passively managed using index sampling. At the start of January, the market price was just under $49/share. The fund has an expense ratio of 0.07%, and the fund’s year-to-date returns were 8.75% (market price) and 8.87% (NAV) as of the start of 2024.

4. IShares MSCI EAFE ETF (EFA)

AUM: $50.4 billion (as of January 5, 2024)

BlackRock issued the iShares MSCI EAFE ETF in 2001, and it has been at the top or close to the top of the international ETF market ever since. The ETF tracks the preeminent Morgan Stanley Capital International (MSCI) EAFE Index, the most widely quoted international equity index in the U.S., which reflects stocks across Europe, Australia, Asia, and the Far East (EAFE).

The fund devotes approximately 23% of its assets to equities in Japan, about 15% to those in the United Kingdom, and about 12% to those in France. Switzerland, Germany, and Australia each draw more than 7% of the fund's assets. At 0.33%, the fund's expense ratio is higher than that of the Vanguard FTSE Developed Markets ETF.

5. Vanguard Intermediate-Term Corporate Bond ETF (VCIT)

AUM: $40.3 billion (as of November 30, 2023)

The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) is an investment fund that seeks to provide a moderate and sustainable level of current income. It primarily invests in high-quality (investment-grade) corporate bonds. The fund has a moderate interest rate risk, with a dollar-weighted average maturity of 5 to 10 years.

As of January 4, 2024, the market price was $80.39 and the NAV price was $80.29. The fund has an expense ratio of 0.04% as of December 22, 2023. The fund’s year-to-date returns were 8.48% (market price) and 8.34% (NAV) as of the start of 2024.

The Bottom Line

Developed market ETFs concentrate on holdings within the most advanced economies globally, distinguishing them from domestically focused or industry-specific ETFs. The five largest developed market ETFs include VEA< IEFA, BNDX< EFA, and VCIT.