Skip to content

EEM vs. VBR: What’s The Difference?

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

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

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

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!

Summary

EEMVBR
NameiShares MSCI Emerging Markets ETFVanguard Small-Cap Value Index Fund ETF Shares
CategoryDiversified Emerging MktsSmall Value
IssueriSharesVanguard
AUM30.33B48.08B
Avg. Return5.47%12.28%
Div. Yield1.48%1.6%
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.

EEM’s dividend yield is 0.12% lower than that of VBR (1.48% vs. 1.6%). Also, EEM yielded on average 6.81% less per year over the past decade (5.47% vs. 12.28%). The expense ratio of EEM is 0.61 percentage points higher than VBR’s (0.68% vs. 0.07%).

FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

EEM vs. VBR - Industry Exposure

EEMVBR
Technology21.36%8.39%
Industrials4.61%18.44%
Energy5.17%5.15%
Communication Services11.76%1.77%
Utilities1.99%3.65%
Healthcare5.06%7.16%
Consumer Defensive5.45%4.36%
Real Estate1.98%10.92%
Financial Services18.39%20.04%
Consumer Cyclical15.16%13.82%
Basic Materials9.07%6.31%

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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.

VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.

EEM is 12.97% more exposed to the Technology sector than VBR (21.36% vs 8.39%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 1.65% lower and 1.34% higher respectively (18.39% vs. 20.04% and 15.16% vs. 13.82%). In total, Utilities, Industrials, and Healthcare also make up 17.59% less of the fund’s holdings compared to VBR (11.66% vs. 29.25%).

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%.

VBR - Holdings

VBR HoldingsWeight
Diamondback Energy Inc0.55%
VICI Properties Inc Ordinary Shares0.54%
IDEX Corp0.54%
Nuance Communications Inc0.5%
Molina Healthcare Inc0.48%
Signature Bank0.46%
Novavax Inc0.44%
Howmet Aerospace Inc0.44%
Apollo Global Management Inc Class A0.42%
Brown & Brown Inc0.41%

VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.

Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.

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 Empower Personal Capital).

Risk Analysis

EEMVBR
Mean Return0.381.08
R-squared83.582.2
Std. Deviation17.7918.37
Alpha-2.33-5.09
Beta1.081.23
Sharpe Ratio0.220.67
Treynor Ratio2.229.15

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

The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Treynor Ratio of 9.15 with a Mean Return of 1.08 and a Standard Deviation of 18.37. Its Beta is 1.23 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a Alpha of -5.09 and a R-squared of 82.2.

EEM’s Mean Return is 0.70 points lower than that of VBR and its R-squared is 1.30 points higher. With a Standard Deviation of 17.79, EEM is slightly less volatile than VBR. The Alpha and Beta of EEM are 2.76 points higher and 0.15 points lower than VBR’s Alpha and Beta.

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).

Performance

Annual Returns

EEM vs. VBR - Annual Returns

YearEEMVBR
202017.56%5.82%
201917.67%22.76%
2018-14.98%-12.22%
201736.42%11.79%
201610.51%24.8%
2015-15.41%-4.67%
2014-2.82%10.55%
2013-3.14%36.57%
201217.32%18.78%
2011-18.87%-4.05%
201015.93%24.97%

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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.

Portfolio Growth

EEM vs. VBR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$15,5785.47%
VBR$10,000$32,61112.28%

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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.

EEM’s CAGR is 6.81 percentage points lower than that of VBR and as a result, would have yielded $17,033 less on a $10,000 investment. Thus, EEM performed worse than VBR by 6.81% 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.

9125d72911bdc1f2dd2d1918a15aaf4c?s=250&d=mm&r=g

Leave a Reply

Your email address will not be published. Required fields are marked *