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EMB vs. IWN: What’s The Difference?

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. EMB is a iShares Emerging Markets Bond fund and IWN is a iShares Small Value fund. So, what’s the difference between EMB and IWN? And which fund is better?

The expense ratio of EMB is 0.15 percentage points higher than IWN’s (0.39% vs. 0.24%). EMB is mostly comprised of BBB bonds while IWN has a high exposure to the financial services sector. Overall, EMB has provided lower returns than IWN over the past 11 years.

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

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Summary

EMBIWN
NameiShares J.P. Morgan USD Emerging Markets Bond ETFiShares Russell 2000 Value ETF
CategoryEmerging Markets BondSmall Value
IssueriSharesiShares
AUM19.76B15.48B
Avg. Return6.43%10.96%
Div. Yield3.85%1.26%
Expense Ratio0.39%0.24%

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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.

EMB’s dividend yield is 2.59% higher than that of IWN (3.85% vs. 1.26%). Also, EMB yielded on average 4.53% less per year over the past decade (6.43% vs. 10.96%). The expense ratio of EMB is 0.15 percentage points higher than IWN’s (0.39% vs. 0.24%).

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Fund Composition

Holdings

EMB - Holdings

EMB Bond SectorsWeight
BBB33.79%
B21.97%
BB16.92%
A13.67%
AA7.97%
Below B4.49%
Others1.11%
AAA0.09%
US Government0.0%

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.

IWN - Holdings

IWN HoldingsWeight
AMC Entertainment Holdings Inc Class A1.06%
Tenet Healthcare Corp0.47%
Stag Industrial Inc0.47%
Ovintiv Inc0.45%
EMCOR Group Inc0.42%
Valley National Bancorp0.37%
Chesapeake Energy Corp Ordinary Shares – New0.37%
Agree Realty Corp0.36%
Macy’s Inc0.35%
Essent Group Ltd0.35%

IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.

Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.

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Risk Analysis

EMBIWN
Mean Return0.441.01
R-squared23.3472.64
Std. Deviation8.4419.28
Alpha0.89-6.32
Beta1.361.21
Sharpe Ratio0.550.59
Treynor Ratio3.248.3

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

The iShares Russell 2000 Value ETF (IWN) has a Sharpe Ratio of 0.59 with a Beta of 1.21 and a Alpha of -6.32. Its Treynor Ratio is 8.3 while IWN’s Standard Deviation is 19.28. Furthermore, the fund has a R-squared of 72.64 and a Mean Return of 1.01.

EMB’s Mean Return is 0.57 points lower than that of IWN and its R-squared is 49.30 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than IWN. The Alpha and Beta of EMB are 7.21 points higher and 0.15 points higher than IWN’s Alpha and Beta.

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Performance

Annual Returns

EMB vs. IWN - Annual Returns

YearEMBIWN
20205.48%4.5%
201915.57%22.17%
2018-5.67%-12.94%
20179.98%7.73%
20169.41%31.64%
20150.43%-7.53%
20146.69%4.13%
2013-7.42%34.3%
201217.64%17.92%
20117.2%-5.64%
201011.47%24.29%

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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.

Portfolio Growth

EMB vs. IWN - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EMB$10,000$19,2956.43%
IWN$10,000$28,18910.96%

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 IWN, the end total would have been $28,189. This equates to a $18,189 profit over 11 years and a compound annual growth rate (CAGR) of 10.96%.

EMB’s CAGR is 4.53 percentage points lower than that of IWN and as a result, would have yielded $8,894 less on a $10,000 investment. Thus, EMB performed worse than IWN by 4.53% annually.


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