The iShares MSCI Emerging Markets ETF (EEM) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between EEM and MUB? And which fund is better?
The expense ratio of EEM is 0.61 percentage points higher than MUB’s (0.68% vs. 0.07%). EEM also has a high exposure to the technology sector while MUB is mostly comprised of AA bonds. Overall, EEM has provided higher returns than MUB over the past ten years.
In this article, we’ll compare EEM vs. MUB. We’ll look at holdings and industry exposure, as well as at their performance and portfolio growth. Moreover, I’ll also discuss EEM’s and MUB’s annual returns, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| EEM | MUB | |
| Name | iShares MSCI Emerging Markets ETF | iShares National Muni Bond ETF |
| Category | Diversified Emerging Mkts | Muni National Interm |
| Issuer | iShares | iShares |
| AUM | 30.33B | 22.71B |
| Avg. Return | 5.47% | 4.04% |
| Div. Yield | 1.48% | 1.96% |
| Expense Ratio | 0.68% | 0.07% |
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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.
EEM’s dividend yield is 0.48% lower than that of MUB (1.48% vs. 1.96%). Also, EEM yielded on average 1.43% more per year over the past decade (5.47% vs. 4.04%). The expense ratio of EEM is 0.61 percentage points higher than MUB’s (0.68% vs. 0.07%).
Fund Composition
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%.
| MUB Bond Sectors | Weight |
| AA | 60.38% |
| AAA | 18.39% |
| A | 15.04% |
| BBB | 6.0% |
| Others | 0.17% |
| BB | 0.02% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.
Risk Analysis
| EEM | MUB | |
| Mean Return | 0.38 | 0.32 |
| R-squared | 83.5 | 99 |
| Std. Deviation | 17.79 | 3.68 |
| Alpha | -2.33 | -0.46 |
| Beta | 1.08 | 1.01 |
| Sharpe Ratio | 0.22 | 0.88 |
| Treynor Ratio | 2.22 | 3.2 |
The iShares MSCI Emerging Markets ETF (EEM) has a Sharpe Ratio of 0.22 with a Treynor Ratio of 2.22 and a Alpha of -2.33. Its R-squared is 83.5 while EEM’s Beta is 1.08. Furthermore, the fund has a Standard Deviation of 17.79 and a Mean Return of 0.38.
The iShares National Muni Bond ETF (MUB) has a Mean Return of 0.32 with a Sharpe Ratio of 0.88 and a Treynor Ratio of 3.2. Its R-squared is 99 while MUB’s Alpha is -0.46. Furthermore, the fund has a Beta of 1.01 and a Standard Deviation of 3.68.
EEM’s Mean Return is 0.06 points higher than that of MUB and its R-squared is 15.50 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than MUB. The Alpha and Beta of EEM are 1.87 points lower and 0.07 points higher than MUB’s Alpha and Beta.
Performance
Annual Returns
| Year | EEM | MUB |
| 2020 | 17.56% | 4.87% |
| 2019 | 17.67% | 7.28% |
| 2018 | -14.98% | 0.86% |
| 2017 | 36.42% | 4.61% |
| 2016 | 10.51% | 0.06% |
| 2015 | -15.41% | 2.99% |
| 2014 | -2.82% | 8.61% |
| 2013 | -3.14% | -3.26% |
| 2012 | 17.32% | 6.14% |
| 2011 | -18.87% | 10.85% |
| 2010 | 15.93% | 1.4% |
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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $15,578 | 5.47% |
| MUB | $10,000 | $15,333 | 4.04% |
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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.
EEM’s CAGR is 1.43 percentage points higher than that of MUB and as a result, would have yielded $245 more on a $10,000 investment. Thus, EEM outperformed MUB by 1.43% annually.
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