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EEM vs. DIA: What’s The Difference?

The iShares MSCI Emerging Markets ETF (EEM) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between EEM and DIA? And which fund is better?

The expense ratio of EEM is 0.52 percentage points higher than DIA’s (0.68% vs. 0.16%). EEM also has a higher exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than DIA over the past ten years.

In this article, we’ll compare EEM vs. DIA. We’ll look at risk metrics and performance, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss EEM’s and DIA’s holdings, fund composition, and industry exposure and examine how these affect their overall returns.

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

EEMDIA
NameiShares MSCI Emerging Markets ETFSPDR Dow Jones Industrial Average ETF Trust
CategoryDiversified Emerging MktsLarge Value
IssueriSharesSPDR State Street Global Advisors
AUM30.33B30.46B
Avg. Return5.47%13.35%
Div. Yield1.48%1.61%
Expense Ratio0.68%0.16%

The iShares MSCI Emerging Markets ETF (EEM) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 30.33B total assets under management and has yielded an average annual return of 5.47% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.68%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

EEM’s dividend yield is 0.13% lower than that of DIA (1.48% vs. 1.61%). Also, EEM yielded on average 7.88% less per year over the past decade (5.47% vs. 13.35%). The expense ratio of EEM is 0.52 percentage points higher than DIA’s (0.68% vs. 0.16%).

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Fund Composition

Industry Exposure

EEM vs. DIA - Industry Exposure

EEMDIA
Technology21.36%17.32%
Industrials4.61%16.7%
Energy5.17%2.0%
Communication Services11.76%4.42%
Utilities1.99%0.0%
Healthcare5.06%17.92%
Consumer Defensive5.45%6.3%
Real Estate1.98%0.0%
Financial Services18.39%20.68%
Consumer Cyclical15.16%13.44%
Basic Materials9.07%1.21%

The iShares MSCI Emerging Markets ETF (EEM) has the most exposure to the Technology sector at 21.36%. This is followed by Financial Services and Consumer Cyclical at 18.39% and 15.16% respectively. Utilities (1.99%), Industrials (4.61%), and Healthcare (5.06%) only make up 11.66% of the fund’s total assets.

EEM’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.17%, 5.45%, 9.07%, 11.76%, and 15.16%.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

EEM is 4.04% more exposed to the Technology sector than DIA (21.36% vs 17.32%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 2.29% lower and 1.72% higher respectively (18.39% vs. 20.68% and 15.16% vs. 13.44%). In total, Utilities, Industrials, and Healthcare also make up 22.96% less of the fund’s holdings compared to DIA (11.66% vs. 34.62%).

Holdings

EEM - Holdings

EEM HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd6.36%
Alibaba Group Holding Ltd Ordinary Shares4.58%
Tencent Holdings Ltd4.41%
Samsung Electronics Co Ltd4.05%
Meituan1.24%
Vale SA1.04%
Naspers Ltd Class N1.04%
Reliance Industries Ltd Shs Dematerialised0.97%
Infosys Ltd0.92%
China Construction Bank Corp Class H0.83%

EEM’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Alibaba Group Holding Ltd Ordinary Shares, Tencent Holdings Ltd, Samsung Electronics Co Ltd, and Meituan at 6.36%, 4.58%, 4.41%, 4.05%, and 1.24%.

Vale SA (1.04%), Naspers Ltd Class N (1.04%), and Reliance Industries Ltd Shs Dematerialised (0.97%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the EEM’s holdings at 0.92% and 0.83%.

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

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Risk Analysis

EEMDIA
Mean Return0.381.13
R-squared83.593.31
Std. Deviation17.7913.68
Alpha-2.33-0.94
Beta1.080.97
Sharpe Ratio0.220.94
Treynor Ratio2.2213.07

The iShares MSCI Emerging Markets ETF (EEM) has a Mean Return of 0.38 with a Sharpe Ratio of 0.22 and a Beta of 1.08. Its Standard Deviation is 17.79 while EEM’s Alpha is -2.33. Furthermore, the fund has a Treynor Ratio of 2.22 and a R-squared of 83.5.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Sharpe Ratio of 0.94 with a Alpha of -0.94 and a Mean Return of 1.13. Its Treynor Ratio is 13.07 while DIA’s Standard Deviation is 13.68. Furthermore, the fund has a R-squared of 93.31 and a Beta of 0.97.

EEM’s Mean Return is 0.75 points lower than that of DIA and its R-squared is 9.81 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than DIA. The Alpha and Beta of EEM are 1.39 points lower and 0.11 points higher than DIA’s Alpha and Beta.

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Performance

Annual Returns

EEM vs. DIA - Annual Returns

YearEEMDIA
202017.56%9.63%
201917.67%25.09%
2018-14.98%-3.6%
201736.42%27.97%
201610.51%16.28%
2015-15.41%0.1%
2014-2.82%9.88%
2013-3.14%29.41%
201217.32%10.04%
2011-18.87%8.21%
201015.93%13.87%

EEM had its best year in 2017 with an annual return of 36.42%. EEM’s worst year over the past decade yielded -18.87% and occurred in 2011. In most years the iShares MSCI Emerging Markets ETF provided moderate returns such as in 2014, 2016, and 2010 where annual returns amounted to -2.82%, 10.51%, and 15.93% respectively.

The year 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

EEM vs. DIA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$15,5785.47%
DIA$10,000$37,96513.35%

A $10,000 investment in EEM would have resulted in a final balance of $15,578. This is a profit of $5,578 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.47%.

With a $10,000 investment in DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

EEM’s CAGR is 7.88 percentage points lower than that of DIA and as a result, would have yielded $22,387 less on a $10,000 investment. Thus, EEM performed worse than DIA by 7.88% annually.


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