Skip to content

EEM vs. VBK: What’s The Difference?

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

The expense ratio of EEM is 0.61 percentage points higher than VBK’s (0.68% vs. 0.07%). EEM also has a lower exposure to the technology sector and a lower standard deviation. Overall, EEM has provided lower returns than VBK over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

EEMVBK
NameiShares MSCI Emerging Markets ETFVanguard Small-Cap Growth Index Fund ETF Shares
CategoryDiversified Emerging MktsSmall Growth
IssueriSharesVanguard
AUM30.33B37.89B
Avg. Return5.47%16.53%
Div. Yield1.48%0.45%
Expense Ratio0.68%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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

EEM’s dividend yield is 1.03% higher than that of VBK (1.48% vs. 0.45%). Also, EEM yielded on average 11.06% less per year over the past decade (5.47% vs. 16.53%). The expense ratio of EEM is 0.61 percentage points higher than VBK’s (0.68% vs. 0.07%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

EEM vs. VBK - Industry Exposure

EEMVBK
Technology21.36%27.87%
Industrials4.61%13.19%
Energy5.17%1.77%
Communication Services11.76%3.24%
Utilities1.99%0.32%
Healthcare5.06%23.24%
Consumer Defensive5.45%3.83%
Real Estate1.98%7.87%
Financial Services18.39%4.05%
Consumer Cyclical15.16%12.13%
Basic Materials9.07%2.49%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

EEM is 6.51% less exposed to the Technology sector than VBK (21.36% vs 27.87%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 14.34% higher and 3.03% higher respectively (18.39% vs. 4.05% and 15.16% vs. 12.13%). In total, Utilities, Industrials, and Healthcare also make up 25.09% less of the fund’s holdings compared to VBK (11.66% vs. 36.75%).

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%.

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

EEMVBK
Mean Return0.381.22
R-squared83.580.56
Std. Deviation17.7917.95
Alpha-2.33-2.81
Beta1.081.18
Sharpe Ratio0.220.78
Treynor Ratio2.2211.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Mean Return of 1.22 with a Sharpe Ratio of 0.78 and a Treynor Ratio of 11.18. Its Alpha is -2.81 while VBK’s R-squared is 80.56. Furthermore, the fund has a Beta of 1.18 and a Standard Deviation of 17.95.

EEM’s Mean Return is 0.84 points lower than that of VBK and its R-squared is 2.94 points higher. With a Standard Deviation of 17.79, EEM is slightly less volatile than VBK. The Alpha and Beta of EEM are 0.48 points higher and 0.10 points lower than VBK’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

EEM vs. VBK - Annual Returns

YearEEMVBK
202017.56%35.29%
201917.67%32.75%
2018-14.98%-5.68%
201736.42%21.9%
201610.51%10.74%
2015-15.41%-2.51%
2014-2.82%4.02%
2013-3.14%38.18%
201217.32%17.67%
2011-18.87%-1.43%
201015.93%30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

EEM vs. VBK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$15,5785.47%
VBK$10,000$48,63916.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

EEM’s CAGR is 11.06 percentage points lower than that of VBK and as a result, would have yielded $33,061 less on a $10,000 investment. Thus, EEM performed worse than VBK by 11.06% 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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) 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!

3) 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!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

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

Leave a Reply

Your email address will not be published.