The iShares MSCI Emerging Markets ETF (EEM) and the iShares Russell Mid-Cap Value ETF (IWS) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and IWS is a iShares Mid-Cap Value fund. So, what’s the difference between EEM and IWS? And which fund is better?
The expense ratio of EEM is 0.45 percentage points higher than IWS’s (0.68% vs. 0.23%). EEM also has a higher exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than IWS over the past ten years.
In this article, we’ll compare EEM vs. IWS. We’ll look at fund composition and performance, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss EEM’s and IWS’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
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Summary
| EEM | IWS | |
| Name | iShares MSCI Emerging Markets ETF | iShares Russell Mid-Cap Value ETF |
| Category | Diversified Emerging Mkts | Mid-Cap Value |
| Issuer | iShares | iShares |
| AUM | 30.33B | 14.24B |
| Avg. Return | 5.47% | 12.35% |
| Div. Yield | 1.48% | 1.34% |
| Expense Ratio | 0.68% | 0.23% |
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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
EEM’s dividend yield is 0.14% higher than that of IWS (1.48% vs. 1.34%). Also, EEM yielded on average 6.88% less per year over the past decade (5.47% vs. 12.35%). The expense ratio of EEM is 0.45 percentage points higher than IWS’s (0.68% vs. 0.23%).
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Fund Composition
Industry Exposure
| EEM | IWS | |
| Technology | 21.36% | 11.39% |
| Industrials | 4.61% | 14.6% |
| Energy | 5.17% | 4.71% |
| Communication Services | 11.76% | 4.08% |
| Utilities | 1.99% | 6.97% |
| Healthcare | 5.06% | 8.56% |
| Consumer Defensive | 5.45% | 4.76% |
| Real Estate | 1.98% | 11.71% |
| Financial Services | 18.39% | 15.75% |
| Consumer Cyclical | 15.16% | 12.07% |
| Basic Materials | 9.07% | 5.4% |
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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
EEM is 9.97% more exposed to the Technology sector than IWS (21.36% vs 11.39%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 2.64% higher and 3.09% higher respectively (18.39% vs. 15.75% and 15.16% vs. 12.07%). In total, Utilities, Industrials, and Healthcare also make up 18.47% less of the fund’s holdings compared to IWS (11.66% vs. 30.13%).
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%.
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
Risk Analysis
| EEM | IWS | |
| Mean Return | 0.38 | 1.06 |
| R-squared | 83.5 | 87.04 |
| Std. Deviation | 17.79 | 16.03 |
| Alpha | -2.33 | -4.11 |
| Beta | 1.08 | 1.1 |
| Sharpe Ratio | 0.22 | 0.75 |
| Treynor Ratio | 2.22 | 10.3 |
The iShares MSCI Emerging Markets ETF (EEM) has a Alpha of -2.33 with a Mean Return of 0.38 and a Beta of 1.08. Its Sharpe Ratio is 0.22 while EEM’s R-squared is 83.5. Furthermore, the fund has a Standard Deviation of 17.79 and a Treynor Ratio of 2.22.
The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a R-squared of 87.04 and a Standard Deviation of 16.03. Its Beta is 1.1 while IWS’s Sharpe Ratio is 0.75. Furthermore, the fund has a Treynor Ratio of 10.3 and a Mean Return of 1.06.
EEM’s Mean Return is 0.68 points lower than that of IWS and its R-squared is 3.54 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than IWS. The Alpha and Beta of EEM are 1.78 points higher and 0.02 points lower than IWS’s Alpha and Beta.
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Performance
Annual Returns
| Year | EEM | IWS |
| 2020 | 17.56% | 4.76% |
| 2019 | 17.67% | 26.78% |
| 2018 | -14.98% | -12.36% |
| 2017 | 36.42% | 13.1% |
| 2016 | 10.51% | 19.69% |
| 2015 | -15.41% | -4.93% |
| 2014 | -2.82% | 14.49% |
| 2013 | -3.14% | 33.11% |
| 2012 | 17.32% | 18.27% |
| 2011 | -18.87% | -1.55% |
| 2010 | 15.93% | 24.46% |
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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $15,578 | 5.47% |
| IWS | $10,000 | $33,083 | 12.35% |
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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.
EEM’s CAGR is 6.88 percentage points lower than that of IWS and as a result, would have yielded $17,505 less on a $10,000 investment. Thus, EEM performed worse than IWS by 6.88% annually.
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