EMB vs. ACWI: What’s The Difference?

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. EMB is a iShares Emerging Markets Bond fund and ACWI is a iShares N/A fund. So, what’s the difference between EMB and ACWI? And which fund is better?

The expense ratio of EMB is 0.07 percentage points higher than ACWI’s (0.39% vs. 0.32%). EMB is mostly comprised of BBB bonds while ACWI has a high exposure to the technology sector. Overall, EMB has provided lower returns than ACWI over the past 11 years.

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

Summary

EMB ACWI
Name iShares J.P. Morgan USD Emerging Markets Bond ETF iShares MSCI ACWI ETF
Category Emerging Markets Bond N/A
Issuer iShares iShares
AUM 19.76B 16.85B
Avg. Return 6.43% 10.21%
Div. Yield 3.85% 1.39%
Expense Ratio 0.39% 0.32%

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B 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 3.85% with an expense ratio of 0.39%.

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

EMB’s dividend yield is 2.46% higher than that of ACWI (3.85% vs. 1.39%). Also, EMB yielded on average 3.78% less per year over the past decade (6.43% vs. 10.21%). The expense ratio of EMB is 0.07 percentage points higher than ACWI’s (0.39% vs. 0.32%).

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Fund Composition

Holdings

EMB - Holdings

EMB Bond Sectors Weight
BBB 33.79%
B 21.97%
BB 16.92%
A 13.67%
AA 7.97%
Below B 4.49%
Others 1.11%
AAA 0.09%
US Government 0.0%

EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

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Risk Analysis

EMB ACWI
Mean Return 0.44 0.89
R-squared 23.34 99.96
Std. Deviation 8.44 14.05
Alpha 0.89 0.15
Beta 1.36 1
Sharpe Ratio 0.55 0.71
Treynor Ratio 3.24 9.45

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Beta of 1.36 with a Standard Deviation of 8.44 and a Alpha of 0.89. Its Mean Return is 0.44 while EMB’s R-squared is 23.34. Furthermore, the fund has a Treynor Ratio of 3.24 and a Sharpe Ratio of 0.55.

The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Alpha of 0.15 and a Treynor Ratio of 9.45. Its Standard Deviation is 14.05 while ACWI’s Sharpe Ratio is 0.71. Furthermore, the fund has a R-squared of 99.96 and a Beta of 1.

EMB’s Mean Return is 0.45 points lower than that of ACWI and its R-squared is 76.62 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than ACWI. The Alpha and Beta of EMB are 0.74 points higher and 0.36 points higher than ACWI’s Alpha and Beta.

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Performance

Annual Returns

EMB vs. ACWI - Annual Returns

Year EMB ACWI
2020 5.48% 16.38%
2019 15.57% 26.7%
2018 -5.67% -9.15%
2017 9.98% 24.35%
2016 9.41% 8.22%
2015 0.43% -2.39%
2014 6.69% 4.64%
2013 -7.42% 22.91%
2012 17.64% 15.99%
2011 7.2% -7.6%
2010 11.47% 12.31%

EMB had its best year in 2012 with an annual return of 17.64%. EMB’s worst year over the past decade yielded -7.42% and occurred in 2013. In most years the iShares J.P. Morgan USD Emerging Markets Bond ETF provided moderate returns such as in 2014, 2011, and 2016 where annual returns amounted to 6.69%, 7.2%, and 9.41% respectively.

The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.

Portfolio Growth

EMB vs. ACWI - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EMB $10,000 $19,295 6.43%
ACWI $10,000 $27,241 10.21%

A $10,000 investment in EMB would have resulted in a final balance of $19,295. This is a profit of $9,295 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.

EMB’s CAGR is 3.78 percentage points lower than that of ACWI and as a result, would have yielded $7,946 less on a $10,000 investment. Thus, EMB performed worse than ACWI by 3.78% annually.


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