The iShares MSCI Emerging Markets ETF (EEM) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between EEM and IWR? And which fund is better?
The expense ratio of EEM is 0.49 percentage points higher than IWR’s (0.68% vs. 0.19%). EEM also has a higher exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than IWR over the past ten years.
In this article, we’ll compare EEM vs. IWR. We’ll look at fund composition and annual returns, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss EEM’s and IWR’s risk metrics, holdings, and performance and examine how these affect their overall returns.
Summary
| EEM | IWR | |
| Name | iShares MSCI Emerging Markets ETF | iShares Russell Mid-Cap ETF |
| Category | Diversified Emerging Mkts | Mid-Cap Blend |
| Issuer | iShares | iShares |
| AUM | 30.33B | 29.84B |
| Avg. Return | 5.47% | 14.15% |
| Div. Yield | 1.48% | 0.99% |
| Expense Ratio | 0.68% | 0.19% |
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 ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.
EEM’s dividend yield is 0.49% higher than that of IWR (1.48% vs. 0.99%). Also, EEM yielded on average 8.68% less per year over the past decade (5.47% vs. 14.15%). The expense ratio of EEM is 0.49 percentage points higher than IWR’s (0.68% vs. 0.19%).
Fund Composition
Industry Exposure
| EEM | IWR | |
| Technology | 21.36% | 19.67% |
| Industrials | 4.61% | 14.54% |
| Energy | 5.17% | 3.48% |
| Communication Services | 11.76% | 4.64% |
| Utilities | 1.99% | 4.46% |
| Healthcare | 5.06% | 11.76% |
| Consumer Defensive | 5.45% | 3.82% |
| Real Estate | 1.98% | 8.31% |
| Financial Services | 18.39% | 11.64% |
| Consumer Cyclical | 15.16% | 13.59% |
| Basic Materials | 9.07% | 4.1% |
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 ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.
EEM is 1.69% more exposed to the Technology sector than IWR (21.36% vs 19.67%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 6.75% higher and 1.57% higher respectively (18.39% vs. 11.64% and 15.16% vs. 13.59%). In total, Utilities, Industrials, and Healthcare also make up 19.10% less of the fund’s holdings compared to IWR (11.66% vs. 30.76%).
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%.
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
Risk Analysis
| EEM | IWR | |
| Mean Return | 0.38 | 1.17 |
| R-squared | 83.5 | 91.52 |
| Std. Deviation | 17.79 | 15.66 |
| Alpha | -2.33 | -2.8 |
| Beta | 1.08 | 1.11 |
| Sharpe Ratio | 0.22 | 0.86 |
| Treynor Ratio | 2.22 | 11.72 |
The iShares MSCI Emerging Markets ETF (EEM) has a R-squared of 83.5 with a Alpha of -2.33 and a Beta of 1.08. Its Treynor Ratio is 2.22 while EEM’s Standard Deviation is 17.79. Furthermore, the fund has a Sharpe Ratio of 0.22 and a Mean Return of 0.38.
The iShares Russell Mid-Cap ETF (IWR) has a Alpha of -2.8 with a Treynor Ratio of 11.72 and a Standard Deviation of 15.66. Its Sharpe Ratio is 0.86 while IWR’s R-squared is 91.52. Furthermore, the fund has a Beta of 1.11 and a Mean Return of 1.17.
EEM’s Mean Return is 0.79 points lower than that of IWR and its R-squared is 8.02 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than IWR. The Alpha and Beta of EEM are 0.47 points higher and 0.03 points lower than IWR’s Alpha and Beta.
Performance
Annual Returns
| Year | EEM | IWR |
| 2020 | 17.56% | 16.91% |
| 2019 | 17.67% | 30.31% |
| 2018 | -14.98% | -9.13% |
| 2017 | 36.42% | 18.32% |
| 2016 | 10.51% | 13.58% |
| 2015 | -15.41% | -2.57% |
| 2014 | -2.82% | 13.03% |
| 2013 | -3.14% | 34.5% |
| 2012 | 17.32% | 17.13% |
| 2011 | -18.87% | -1.67% |
| 2010 | 15.93% | 25.25% |
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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $15,578 | 5.47% |
| IWR | $10,000 | $39,751 | 14.15% |
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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.
EEM’s CAGR is 8.68 percentage points lower than that of IWR and as a result, would have yielded $24,173 less on a $10,000 investment. Thus, EEM performed worse than IWR by 8.68% annually.
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