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EEM vs. IWP: What’s The Difference?

The iShares MSCI Emerging Markets ETF (EEM) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between EEM and IWP? And which fund is better?

The expense ratio of EEM is 0.44 percentage points higher than IWP’s (0.68% vs. 0.24%). EEM also has a lower exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than IWP over the past ten years.

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

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Summary

EEMIWP
NameiShares MSCI Emerging Markets ETFiShares Russell Mid-Cap Growth ETF
CategoryDiversified Emerging MktsMid-Cap Growth
IssueriSharesiShares
AUM30.33B15.7B
Avg. Return5.47%16.75%
Div. Yield1.48%0.26%
Expense Ratio0.68%0.24%

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 Russell Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

EEM’s dividend yield is 1.22% higher than that of IWP (1.48% vs. 0.26%). Also, EEM yielded on average 11.28% less per year over the past decade (5.47% vs. 16.75%). The expense ratio of EEM is 0.44 percentage points higher than IWP’s (0.68% vs. 0.24%).

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Fund Composition

Industry Exposure

EEM vs. IWP - Industry Exposure

EEMIWP
Technology21.36%33.88%
Industrials4.61%14.09%
Energy5.17%1.51%
Communication Services11.76%6.32%
Utilities1.99%0.16%
Healthcare5.06%16.79%
Consumer Defensive5.45%2.32%
Real Estate1.98%2.46%
Financial Services18.39%4.52%
Consumer Cyclical15.16%16.09%
Basic Materials9.07%1.86%

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 Russell Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

EEM is 12.52% less exposed to the Technology sector than IWP (21.36% vs 33.88%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 13.87% higher and 0.93% lower respectively (18.39% vs. 4.52% and 15.16% vs. 16.09%). In total, Utilities, Industrials, and Healthcare also make up 19.38% less of the fund’s holdings compared to IWP (11.66% vs. 31.04%).

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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

EEMIWP
Mean Return0.381.27
R-squared83.587.01
Std. Deviation17.7916.05
Alpha-2.33-1.03
Beta1.081.1
Sharpe Ratio0.220.91
Treynor Ratio2.2212.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Standard Deviation of 16.05 with a Alpha of -1.03 and a Sharpe Ratio of 0.91. Its Treynor Ratio is 12.98 while IWP’s Beta is 1.1. Furthermore, the fund has a Mean Return of 1.27 and a R-squared of 87.01.

EEM’s Mean Return is 0.89 points lower than that of IWP and its R-squared is 3.51 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than IWP. The Alpha and Beta of EEM are 1.30 points lower and 0.02 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

EEM vs. IWP - Annual Returns

YearEEMIWP
202017.56%35.29%
201917.67%35.14%
2018-14.98%-4.95%
201736.42%24.98%
201610.51%7.15%
2015-15.41%-0.39%
2014-2.82%11.68%
2013-3.14%35.44%
201217.32%15.62%
2011-18.87%-1.82%
201015.93%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

EEM vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$15,5785.47%
IWP$10,000$50,19116.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

EEM’s CAGR is 11.28 percentage points lower than that of IWP and as a result, would have yielded $34,613 less on a $10,000 investment. Thus, EEM performed worse than IWP by 11.28% annually.


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