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.
Summary
| EEM | VV | |
| Name | iShares MSCI Emerging Markets ETF | Vanguard Large-Cap Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 30.33B | 37.65B |
| Avg. Return | 5.47% | 14.75% |
| Div. Yield | 1.48% | 1.26% |
| Expense Ratio | 0.68% | 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%).
Fund Composition
Industry Exposure
| EEM | VV | |
| Technology | 21.36% | 25.38% |
| Industrials | 4.61% | 8.39% |
| Energy | 5.17% | 2.62% |
| Communication Services | 11.76% | 11.68% |
| Utilities | 1.99% | 2.35% |
| Healthcare | 5.06% | 13.22% |
| Consumer Defensive | 5.45% | 6.06% |
| Real Estate | 1.98% | 2.7% |
| Financial Services | 18.39% | 13.82% |
| Consumer Cyclical | 15.16% | 11.65% |
| Basic Materials | 9.07% | 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 | 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%.
| VV Holdings | Weight |
| Apple Inc | 5.7% |
| Microsoft Corp | 5.35% |
| Amazon.com Inc | 3.87% |
| Facebook Inc Class A | 2.19% |
| Alphabet Inc Class A | 1.93% |
| Alphabet Inc Class C | 1.81% |
| Tesla Inc | 1.37% |
| Berkshire Hathaway Inc Class B | 1.3% |
| NVIDIA Corp | 1.24% |
| JPMorgan Chase & Co | 1.24% |
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%.
Risk Analysis
| EEM | VV | |
| Mean Return | 0.38 | 1.24 |
| R-squared | 83.5 | 99.86 |
| Std. Deviation | 17.79 | 13.75 |
| Alpha | -2.33 | -0.08 |
| Beta | 1.08 | 1.01 |
| Sharpe Ratio | 0.22 | 1.04 |
| Treynor Ratio | 2.22 | 14.14 |
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.
Performance
Annual Returns
| Year | EEM | VV |
| 2020 | 17.56% | 20.99% |
| 2019 | 17.67% | 31.39% |
| 2018 | -14.98% | -4.44% |
| 2017 | 36.42% | 22.03% |
| 2016 | 10.51% | 11.65% |
| 2015 | -15.41% | 1.07% |
| 2014 | -2.82% | 13.39% |
| 2013 | -3.14% | 32.65% |
| 2012 | 17.32% | 16.09% |
| 2011 | -18.87% | 1.58% |
| 2010 | 15.93% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $15,578 | 5.47% |
| VV | $10,000 | $42,970 | 14.75% |
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.
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.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
