EEM vs. SCHF: What’s The Difference?

The iShares MSCI Emerging Markets ETF (EEM) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between EEM and SCHF? And which fund is better?

The expense ratio of EEM is 0.62 percentage points higher than SCHF’s (0.68% vs. 0.06%). EEM also has a higher exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than SCHF over the past ten years.

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

Summary

EEM SCHF
Name iShares MSCI Emerging Markets ETF Schwab International Equity ETF
Category Diversified Emerging Mkts Foreign Large Blend
Issuer iShares Schwab ETFs
AUM 30.33B 26.99B
Avg. Return 5.47% 6.43%
Div. Yield 1.48% 2.16%
Expense Ratio 0.68% 0.06%

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 Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

EEM’s dividend yield is 0.68% lower than that of SCHF (1.48% vs. 2.16%). Also, EEM yielded on average 0.96% less per year over the past decade (5.47% vs. 6.43%). The expense ratio of EEM is 0.62 percentage points higher than SCHF’s (0.68% vs. 0.06%).

Fund Composition

Industry Exposure

EEM vs. SCHF - Industry Exposure

EEM SCHF
Technology 21.36% 11.55%
Industrials 4.61% 14.86%
Energy 5.17% 4.23%
Communication Services 11.76% 5.65%
Utilities 1.99% 3.09%
Healthcare 5.06% 11.05%
Consumer Defensive 5.45% 9.41%
Real Estate 1.98% 3.17%
Financial Services 18.39% 17.85%
Consumer Cyclical 15.16% 10.87%
Basic Materials 9.07% 8.26%

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 Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

EEM is 9.81% more exposed to the Technology sector than SCHF (21.36% vs 11.55%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 0.54% higher and 4.29% higher respectively (18.39% vs. 17.85% and 15.16% vs. 10.87%). In total, Utilities, Industrials, and Healthcare also make up 17.34% less of the fund’s holdings compared to SCHF (11.66% vs. 29.00%).

Holdings

EEM - 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%.

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

Risk Analysis

EEM SCHF
Mean Return 0.38 0.58
R-squared 83.5 98.16
Std. Deviation 17.79 15.08
Alpha -2.33 0.53
Beta 1.08 0.99
Sharpe Ratio 0.22 0.42
Treynor Ratio 2.22 5.39

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

The Schwab International Equity ETF (SCHF) has a Sharpe Ratio of 0.42 with a Beta of 0.99 and a Mean Return of 0.58. Its Treynor Ratio is 5.39 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Alpha of 0.53 and a Standard Deviation of 15.08.

EEM’s Mean Return is 0.20 points lower than that of SCHF and its R-squared is 14.66 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than SCHF. The Alpha and Beta of EEM are 2.86 points lower and 0.09 points higher than SCHF’s Alpha and Beta.

Performance

Annual Returns

EEM vs. SCHF - Annual Returns

Year EEM SCHF
2020 17.56% 9.86%
2019 17.67% 22.15%
2018 -14.98% -14.39%
2017 36.42% 25.83%
2016 10.51% 2.88%
2015 -15.41% -2.44%
2014 -2.82% -4.44%
2013 -3.14% 20.03%
2012 17.32% 17.12%
2011 -18.87% -12.32%
2010 15.93% 8.6%

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 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

EEM vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EEM $10,000 $13,437 5.47%
SCHF $10,000 $17,089 6.43%

A $10,000 investment in EEM would have resulted in a final balance of $13,437. This is a profit of $3,437 over 10 years and amounts to a compound annual growth rate (CAGR) of 5.47%.

With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

EEM’s CAGR is 0.96 percentage points lower than that of SCHF and as a result, would have yielded $3,652 less on a $10,000 investment. Thus, EEM performed worse than SCHF by 0.96% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply