The iShares MSCI Emerging Markets ETF (EEM) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and IVE is a iShares Large Value fund. So, what’s the difference between EEM and IVE? And which fund is better?
The expense ratio of EEM is 0.50 percentage points higher than IVE’s (0.68% vs. 0.18%). EEM also has a higher exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than IVE over the past ten years.
In this article, we’ll compare EEM vs. IVE. We’ll look at industry exposure and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss EEM’s and IVE’s risk metrics, performance, and fund composition and examine how these affect their overall returns.
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Summary
| EEM | IVE | |
| Name | iShares MSCI Emerging Markets ETF | iShares S&P 500 Value ETF |
| Category | Diversified Emerging Mkts | Large Value |
| Issuer | iShares | iShares |
| AUM | 30.33B | 22.4B |
| Avg. Return | 5.47% | 11.68% |
| Div. Yield | 1.48% | 1.88% |
| Expense Ratio | 0.68% | 0.18% |
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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
EEM’s dividend yield is 0.40% lower than that of IVE (1.48% vs. 1.88%). Also, EEM yielded on average 6.21% less per year over the past decade (5.47% vs. 11.68%). The expense ratio of EEM is 0.50 percentage points higher than IVE’s (0.68% vs. 0.18%).
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Fund Composition
Industry Exposure
| EEM | IVE | |
| Technology | 21.36% | 9.41% |
| Industrials | 4.61% | 12.19% |
| Energy | 5.17% | 5.43% |
| Communication Services | 11.76% | 6.4% |
| Utilities | 1.99% | 4.82% |
| Healthcare | 5.06% | 15.4% |
| Consumer Defensive | 5.45% | 9.23% |
| Real Estate | 1.98% | 4.38% |
| Financial Services | 18.39% | 22.06% |
| Consumer Cyclical | 15.16% | 7.68% |
| Basic Materials | 9.07% | 2.99% |
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 iShares S&P 500 Value ETF (IVE) has the most exposure to the Financial Services sector at 22.06%. This is followed by Healthcare and Industrials at 15.4% and 12.19% respectively. Real Estate (4.38%), Utilities (4.82%), and Energy (5.43%) only make up 14.63% of the fund’s total assets.
IVE’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Consumer Defensive, Technology, and Industrials stocks at 6.4%, 7.68%, 9.23%, 9.41%, and 12.19%.
EEM is 11.95% more exposed to the Technology sector than IVE (21.36% vs 9.41%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 3.67% lower and 7.48% higher respectively (18.39% vs. 22.06% and 15.16% vs. 7.68%). In total, Utilities, Industrials, and Healthcare also make up 20.75% less of the fund’s holdings compared to IVE (11.66% vs. 32.41%).
Holdings
| EEM Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 6.36% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.58% |
| Tencent Holdings Ltd | 4.41% |
| Samsung Electronics Co Ltd | 4.05% |
| Meituan | 1.24% |
| Vale SA | 1.04% |
| Naspers Ltd Class N | 1.04% |
| Reliance Industries Ltd Shs Dematerialised | 0.97% |
| Infosys Ltd | 0.92% |
| China Construction Bank Corp Class H | 0.83% |
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%.
| IVE Holdings | Weight |
| Berkshire Hathaway Inc Class B | 3.05% |
| JPMorgan Chase & Co | 2.65% |
| The Walt Disney Co | 1.85% |
| Bank of America Corp | 1.67% |
| Johnson & Johnson | 1.57% |
| Exxon Mobil Corp | 1.41% |
| Pfizer Inc | 1.38% |
| Cisco Systems Inc | 1.35% |
| Verizon Communications Inc | 1.33% |
| Intel Corp | 1.25% |
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
Risk Analysis
| EEM | IVE | |
| Mean Return | 0.38 | 1.05 |
| R-squared | 83.5 | 92.08 |
| Std. Deviation | 17.79 | 14.3 |
| Alpha | -2.33 | -2.9 |
| Beta | 1.08 | 1.01 |
| Sharpe Ratio | 0.22 | 0.83 |
| Treynor Ratio | 2.22 | 11.41 |
The iShares MSCI Emerging Markets ETF (EEM) has a Mean Return of 0.38 with a Standard Deviation of 17.79 and a Treynor Ratio of 2.22. Its R-squared is 83.5 while EEM’s Alpha is -2.33. Furthermore, the fund has a Beta of 1.08 and a Sharpe Ratio of 0.22.
The iShares S&P 500 Value ETF (IVE) has a Standard Deviation of 14.3 with a Alpha of -2.9 and a R-squared of 92.08. Its Mean Return is 1.05 while IVE’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 11.41 and a Sharpe Ratio of 0.83.
EEM’s Mean Return is 0.67 points lower than that of IVE and its R-squared is 8.58 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than IVE. The Alpha and Beta of EEM are 0.57 points higher and 0.07 points higher than IVE’s Alpha and Beta.
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Performance
Annual Returns
| Year | EEM | IVE |
| 2020 | 17.56% | 1.24% |
| 2019 | 17.67% | 31.71% |
| 2018 | -14.98% | -9.09% |
| 2017 | 36.42% | 15.19% |
| 2016 | 10.51% | 17.17% |
| 2015 | -15.41% | -3.24% |
| 2014 | -2.82% | 12.14% |
| 2013 | -3.14% | 31.69% |
| 2012 | 17.32% | 17.45% |
| 2011 | -18.87% | -0.63% |
| 2010 | 15.93% | 14.9% |
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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $15,578 | 5.47% |
| IVE | $10,000 | $31,350 | 11.68% |
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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
EEM’s CAGR is 6.21 percentage points lower than that of IVE and as a result, would have yielded $15,772 less on a $10,000 investment. Thus, EEM performed worse than IVE by 6.21% annually.
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