The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. EMB is a iShares Emerging Markets Bond fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between EMB and EFV? And which fund is better?
EMB and EFV have the same expense ratio: 0.39%. EMB is mostly comprised of BBB bonds while EFV has a high exposure to the financial services sector. Overall, EMB has provided higher returns than EFV over the past 11 years.
In this article, we’ll compare EMB vs. EFV. We’ll look at performance and holdings, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss EMB’s and EFV’s industry exposure, fund composition, and portfolio growth and examine how these affect their overall returns.
Summary
| EMB | EFV | |
| Name | iShares J.P. Morgan USD Emerging Markets Bond ETF | iShares MSCI EAFE Value ETF |
| Category | Emerging Markets Bond | Foreign Large Value |
| Issuer | iShares | iShares |
| AUM | 19.76B | 14.37B |
| Avg. Return | 6.43% | 3.99% |
| Div. Yield | 3.85% | 2.94% |
| Expense Ratio | 0.39% | 0.39% |
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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
EMB’s dividend yield is 0.91% higher than that of EFV (3.85% vs. 2.94%). Also, EMB yielded on average 2.44% more per year over the past decade (6.43% vs. 3.99%). EMB and EFV have the same expense ratio: 0.39%.
Fund Composition
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.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| EMB | EFV | |
| Mean Return | 0.44 | 0.42 |
| R-squared | 23.34 | 92.15 |
| Std. Deviation | 8.44 | 16.53 |
| Alpha | 0.89 | -1.77 |
| Beta | 1.36 | 1.05 |
| Sharpe Ratio | 0.55 | 0.26 |
| Treynor Ratio | 3.24 | 2.92 |
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Alpha of 0.89 with a Standard Deviation of 8.44 and a Mean Return of 0.44. Its Treynor Ratio is 3.24 while EMB’s Sharpe Ratio is 0.55. Furthermore, the fund has a R-squared of 23.34 and a Beta of 1.36.
The iShares MSCI EAFE Value ETF (EFV) has a Standard Deviation of 16.53 with a Beta of 1.05 and a Alpha of -1.77. Its R-squared is 92.15 while EFV’s Mean Return is 0.42. Furthermore, the fund has a Sharpe Ratio of 0.26 and a Treynor Ratio of 2.92.
EMB’s Mean Return is 0.02 points higher than that of EFV and its R-squared is 68.81 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than EFV. The Alpha and Beta of EMB are 2.66 points higher and 0.31 points higher than EFV’s Alpha and Beta.
Performance
Annual Returns
| Year | EMB | EFV |
| 2020 | 5.48% | -2.78% |
| 2019 | 15.57% | 15.97% |
| 2018 | -5.67% | -14.88% |
| 2017 | 9.98% | 21.22% |
| 2016 | 9.41% | 4.87% |
| 2015 | 0.43% | -5.89% |
| 2014 | 6.69% | -5.65% |
| 2013 | -7.42% | 22.61% |
| 2012 | 17.64% | 17.52% |
| 2011 | 7.2% | -12.24% |
| 2010 | 11.47% | 3.18% |
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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EMB | $10,000 | $19,295 | 6.43% |
| EFV | $10,000 | $14,134 | 3.99% |
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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.
EMB’s CAGR is 2.44 percentage points higher than that of EFV and as a result, would have yielded $5,161 more on a $10,000 investment. Thus, EMB outperformed EFV by 2.44% annually.
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