The iShares Core Dividend Growth ETF (DGRO) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. DGRO is a iShares Large Value fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between DGRO and EMB? And which fund is better?
The expense ratio of DGRO is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%). DGRO also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, DGRO has provided higher returns than EMB over the past 6 years.
In this article, we’ll compare DGRO vs. EMB. We’ll look at performance and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss DGRO’s and EMB’s portfolio growth, holdings, and annual returns and examine how these affect their overall returns.
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Summary
| DGRO | EMB | |
| Name | iShares Core Dividend Growth ETF | iShares J.P. Morgan USD Emerging Markets Bond ETF |
| Category | Large Value | Emerging Markets Bond |
| Issuer | iShares | iShares |
| AUM | 20B | 19.76B |
| Avg. Return | 12.46% | 6.43% |
| Div. Yield | 2.04% | 3.85% |
| Expense Ratio | 0.08% | 0.39% |
The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
DGRO’s dividend yield is 1.81% lower than that of EMB (2.04% vs. 3.85%). Also, DGRO yielded on average 6.02% more per year over the past decade (12.46% vs. 6.43%). The expense ratio of DGRO is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%).
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Fund Composition
Holdings
| DGRO Holdings | Weight |
| Microsoft Corp | 3.29% |
| Apple Inc | 3.26% |
| Pfizer Inc | 2.89% |
| Johnson & Johnson | 2.87% |
| Procter & Gamble Co | 2.79% |
| Verizon Communications Inc | 2.68% |
| JPMorgan Chase & Co | 2.57% |
| The Home Depot Inc | 2.35% |
| Merck & Co Inc | 2.11% |
| Cisco Systems Inc | 1.98% |
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
| EMB Bond Sectors | Weight |
| BBB | 33.79% |
| B | 21.97% |
| BB | 16.92% |
| A | 13.67% |
| AA | 7.97% |
| Below B | 4.49% |
| Others | 1.11% |
| AAA | 0.09% |
| US Government | 0.0% |
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
Risk Analysis
| DGRO | EMB | |
| Mean Return | 0 | 0.44 |
| R-squared | 0 | 23.34 |
| Std. Deviation | 0 | 8.44 |
| Alpha | 0 | 0.89 |
| Beta | 0 | 1.36 |
| Sharpe Ratio | 0 | 0.55 |
| Treynor Ratio | 0 | 3.24 |
The iShares Core Dividend Growth ETF (DGRO) has a Mean Return of 0 with a Alpha of 0 and a Beta of 0. Its Treynor Ratio is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Alpha of 0.89 with a Beta of 1.36 and a Mean Return of 0.44. Its Treynor Ratio is 3.24 while EMB’s Sharpe Ratio is 0.55. Furthermore, the fund has a Standard Deviation of 8.44 and a R-squared of 23.34.
DGRO’s Mean Return is 0.44 points lower than that of EMB and its R-squared is 23.34 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than EMB. The Alpha and Beta of DGRO are 0.89 points lower and 1.36 points lower than EMB’s Alpha and Beta.
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Performance
Annual Returns
| Year | DGRO | EMB |
| 2020 | 9.47% | 5.48% |
| 2019 | 30.02% | 15.57% |
| 2018 | -2.24% | -5.67% |
| 2017 | 22.84% | 9.98% |
| 2016 | 15.27% | 9.41% |
| 2015 | -0.62% | 0.43% |
| 2014 | 0.0% | 6.69% |
| 2013 | 0.0% | -7.42% |
| 2012 | 0.0% | 17.64% |
| 2011 | 0.0% | 7.2% |
| 2010 | 0.0% | 11.47% |
DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| DGRO | $10,000 | $19,580 | 12.46% |
| EMB | $10,000 | $13,896 | 6.43% |
A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.
With a $10,000 investment in EMB, the end total would have been $13,896. This equates to a $3,896 profit over 6 years and a compound annual growth rate (CAGR) of 6.43%.
DGRO’s CAGR is 6.02 percentage points higher than that of EMB and as a result, would have yielded $5,684 more on a $10,000 investment. Thus, DGRO outperformed EMB by 6.02% annually.
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