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EEM vs. IUSB: What’s The Difference?

The iShares MSCI Emerging Markets ETF (EEM) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and IUSB is a iShares N/A fund. So, what’s the difference between EEM and IUSB? And which fund is better?

The expense ratio of EEM is 0.62 percentage points higher than IUSB’s (0.68% vs. 0.06%). EEM also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, EEM has provided higher returns than IUSB over the past ten years.

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

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Summary

EEMIUSB
NameiShares MSCI Emerging Markets ETFiShares Core Total USD Bond Market ETF
CategoryDiversified Emerging MktsN/A
IssueriSharesiShares
AUM30.33B14.49B
Avg. Return5.47%4.13%
Div. Yield1.48%2.1%
Expense Ratio0.68%0.06%

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 iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.

EEM’s dividend yield is 0.62% lower than that of IUSB (1.48% vs. 2.1%). Also, EEM yielded on average 1.34% more per year over the past decade (5.47% vs. 4.13%). The expense ratio of EEM is 0.62 percentage points higher than IUSB’s (0.68% vs. 0.06%).

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Fund Composition

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%.

IUSB - Holdings

IUSB Bond SectorsWeight
AAA58.32%
BBB16.98%
A12.27%
BB4.33%
AA3.36%
B2.8%
Others1.01%
Below B0.92%
US Government0.0%

IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.

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Risk Analysis

EEMIUSB
Mean Return0.380
R-squared83.50
Std. Deviation17.790
Alpha-2.330
Beta1.080
Sharpe Ratio0.220
Treynor Ratio2.220

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

The iShares Core Total USD Bond Market ETF (IUSB) has a Treynor Ratio of 0 with a R-squared of 0 and a Alpha of 0. Its Standard Deviation is 0 while IUSB’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

EEM’s Mean Return is 0.38 points higher than that of IUSB and its R-squared is 83.50 points higher. With a Standard Deviation of 17.79, EEM is slightly more volatile than IUSB. The Alpha and Beta of EEM are 2.33 points lower and 1.08 points higher than IUSB’s Alpha and Beta.

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Performance

Annual Returns

EEM vs. IUSB - Annual Returns

YearEEMIUSB
202017.56%7.59%
201917.67%9.26%
2018-14.98%-0.38%
201736.42%4.06%
201610.51%3.78%
2015-15.41%0.46%
2014-2.82%0.0%
2013-3.14%0.0%
201217.32%0.0%
2011-18.87%0.0%
201015.93%0.0%

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 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.

Portfolio Growth

EEM vs. IUSB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$14,9985.47%
IUSB$10,000$12,7044.13%

A $10,000 investment in EEM would have resulted in a final balance of $14,998. This is a profit of $4,998 over 6 years and amounts to a compound annual growth rate (CAGR) of 5.47%.

With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.

EEM’s CAGR is 1.34 percentage points higher than that of IUSB and as a result, would have yielded $2,294 more on a $10,000 investment. Thus, EEM outperformed IUSB by 1.34% annually.


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