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EEM vs. VV: What’s The Difference?

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

The expense ratio of EEM is 0.64 percentage points higher than VV’s (0.68% vs. 0.04%). EEM also has a lower exposure to the technology sector and a higher standard deviation. Overall, EEM has provided lower returns than VV over the past ten years.

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

Introduction To Mutual Funds
Introduction To Mutual Funds
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Summary

EEMVV
NameiShares MSCI Emerging Markets ETFVanguard Large-Cap Index Fund ETF Shares
CategoryDiversified Emerging MktsLarge Blend
IssueriSharesVanguard
AUM30.33B37.65B
Avg. Return5.47%14.75%
Div. Yield1.48%1.26%
Expense Ratio0.68%0.04%

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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.

EEM’s dividend yield is 0.22% higher than that of VV (1.48% vs. 1.26%). Also, EEM yielded on average 9.27% less per year over the past decade (5.47% vs. 14.75%). The expense ratio of EEM is 0.64 percentage points higher than VV’s (0.68% vs. 0.04%).

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Fund Composition

Industry Exposure

EEM vs. VV - Industry Exposure

EEMVV
Technology21.36%25.38%
Industrials4.61%8.39%
Energy5.17%2.62%
Communication Services11.76%11.68%
Utilities1.99%2.35%
Healthcare5.06%13.22%
Consumer Defensive5.45%6.06%
Real Estate1.98%2.7%
Financial Services18.39%13.82%
Consumer Cyclical15.16%11.65%
Basic Materials9.07%2.13%

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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.

VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.

EEM is 4.02% less exposed to the Technology sector than VV (21.36% vs 25.38%). EEM’s exposure to Financial Services and Consumer Cyclical stocks is 4.57% higher and 3.51% higher respectively (18.39% vs. 13.82% and 15.16% vs. 11.65%). In total, Utilities, Industrials, and Healthcare also make up 12.30% less of the fund’s holdings compared to VV (11.66% vs. 23.96%).

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%.

VV - Holdings

VV HoldingsWeight
Apple Inc5.7%
Microsoft Corp5.35%
Amazon.com Inc3.87%
Facebook Inc Class A2.19%
Alphabet Inc Class A1.93%
Alphabet Inc Class C1.81%
Tesla Inc1.37%
Berkshire Hathaway Inc Class B1.3%
NVIDIA Corp1.24%
JPMorgan Chase & Co1.24%

VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.

Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.

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Risk Analysis

EEMVV
Mean Return0.381.24
R-squared83.599.86
Std. Deviation17.7913.75
Alpha-2.33-0.08
Beta1.081.01
Sharpe Ratio0.221.04
Treynor Ratio2.2214.14

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 Standard Deviation is 17.79 while EEM’s R-squared is 83.5. Furthermore, the fund has a Beta of 1.08 and a Mean Return of 0.38.

The Vanguard Large-Cap Index Fund ETF Shares (VV) has a R-squared of 99.86 with a Sharpe Ratio of 1.04 and a Alpha of -0.08. Its Treynor Ratio is 14.14 while VV’s Mean Return is 1.24. Furthermore, the fund has a Beta of 1.01 and a Standard Deviation of 13.75.

EEM’s Mean Return is 0.86 points lower than that of VV and its R-squared is 16.36 points lower. With a Standard Deviation of 17.79, EEM is slightly more volatile than VV. The Alpha and Beta of EEM are 2.25 points lower and 0.07 points higher than VV’s Alpha and Beta.

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Performance

Annual Returns

EEM vs. VV - Annual Returns

YearEEMVV
202017.56%20.99%
201917.67%31.39%
2018-14.98%-4.44%
201736.42%22.03%
201610.51%11.65%
2015-15.41%1.07%
2014-2.82%13.39%
2013-3.14%32.65%
201217.32%16.09%
2011-18.87%1.58%
201015.93%15.81%

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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.

Portfolio Growth

EEM vs. VV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EEM$10,000$15,5785.47%
VV$10,000$42,97014.75%

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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.

EEM’s CAGR is 9.27 percentage points lower than that of VV and as a result, would have yielded $27,392 less on a $10,000 investment. Thus, EEM performed worse than VV by 9.27% annually.


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