The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. EMB is a iShares Emerging Markets Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between EMB and IUSB? And which fund is better?
The expense ratio of EMB is 0.33 percentage points higher than IUSB’s (0.39% vs. 0.06%). EMB is mostly comprised of BBB bonds and IUSB has a high exposure to AAA bond. Overall, EMB has provided higher returns than IUSB over the past 6 years.
In this article, we’ll compare EMB vs. IUSB. We’ll look at industry exposure and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss EMB’s and IUSB’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
Summary
| EMB | IUSB | |
| Name | iShares J.P. Morgan USD Emerging Markets Bond ETF | iShares Core Total USD Bond Market ETF |
| Category | Emerging Markets Bond | N/A |
| Issuer | iShares | iShares |
| AUM | 19.76B | 14.49B |
| Avg. Return | 6.43% | 4.13% |
| Div. Yield | 3.85% | 2.1% |
| Expense Ratio | 0.39% | 0.06% |
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 Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
EMB’s dividend yield is 1.75% higher than that of IUSB (3.85% vs. 2.1%). Also, EMB yielded on average 2.31% more per year over the past decade (6.43% vs. 4.13%). The expense ratio of EMB is 0.33 percentage points higher than IUSB’s (0.39% vs. 0.06%).
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.
| IUSB Bond Sectors | Weight |
| AAA | 58.32% |
| BBB | 16.98% |
| A | 12.27% |
| BB | 4.33% |
| AA | 3.36% |
| B | 2.8% |
| Others | 1.01% |
| Below B | 0.92% |
| US Government | 0.0% |
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
Risk Analysis
| EMB | IUSB | |
| Mean Return | 0.44 | 0 |
| R-squared | 23.34 | 0 |
| Std. Deviation | 8.44 | 0 |
| Alpha | 0.89 | 0 |
| Beta | 1.36 | 0 |
| Sharpe Ratio | 0.55 | 0 |
| Treynor Ratio | 3.24 | 0 |
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Beta of 1.36 with a R-squared of 23.34 and a Treynor Ratio of 3.24. Its Standard Deviation is 8.44 while EMB’s Sharpe Ratio is 0.55. Furthermore, the fund has a Mean Return of 0.44 and a Alpha of 0.89.
The iShares Core Total USD Bond Market ETF (IUSB) has a Mean Return of 0 with a Beta of 0 and a Alpha of 0. Its Standard Deviation is 0 while IUSB’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Sharpe Ratio of 0.
EMB’s Mean Return is 0.44 points higher than that of IUSB and its R-squared is 23.34 points higher. With a Standard Deviation of 8.44, EMB is slightly more volatile than IUSB. The Alpha and Beta of EMB are 0.89 points higher and 1.36 points higher than IUSB’s Alpha and Beta.
Performance
Annual Returns
| Year | EMB | IUSB |
| 2020 | 5.48% | 7.59% |
| 2019 | 15.57% | 9.26% |
| 2018 | -5.67% | -0.38% |
| 2017 | 9.98% | 4.06% |
| 2016 | 9.41% | 3.78% |
| 2015 | 0.43% | 0.46% |
| 2014 | 6.69% | 0.0% |
| 2013 | -7.42% | 0.0% |
| 2012 | 17.64% | 0.0% |
| 2011 | 7.2% | 0.0% |
| 2010 | 11.47% | 0.0% |
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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EMB | $10,000 | $13,896 | 6.43% |
| IUSB | $10,000 | $12,704 | 4.13% |
A $10,000 investment in EMB would have resulted in a final balance of $13,896. This is a profit of $3,896 over 6 years and amounts to a compound annual growth rate (CAGR) of 6.43%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
EMB’s CAGR is 2.31 percentage points higher than that of IUSB and as a result, would have yielded $1,192 more on a $10,000 investment. Thus, EMB outperformed IUSB by 2.31% annually.
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