EMB vs. IWP: What’s The Difference?

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

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

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

Summary

EMB IWP
Name iShares J.P. Morgan USD Emerging Markets Bond ETF iShares Russell Mid-Cap Growth ETF
Category Emerging Markets Bond Mid-Cap Growth
Issuer iShares iShares
AUM 19.76B 15.7B
Avg. Return 6.43% 16.75%
Div. Yield 3.85% 0.26%
Expense Ratio 0.39% 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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

EMB’s dividend yield is 3.59% higher than that of IWP (3.85% vs. 0.26%). Also, EMB yielded on average 10.31% less per year over the past decade (6.43% vs. 16.75%). The expense ratio of EMB is 0.15 percentage points higher than IWP’s (0.39% vs. 0.24%).

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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.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

EMB IWP
Mean Return 0.44 1.27
R-squared 23.34 87.01
Std. Deviation 8.44 16.05
Alpha 0.89 -1.03
Beta 1.36 1.1
Sharpe Ratio 0.55 0.91
Treynor Ratio 3.24 12.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Alpha of -1.03 with a Sharpe Ratio of 0.91 and a Standard Deviation of 16.05. Its R-squared is 87.01 while IWP’s Treynor Ratio is 12.98. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 1.1.

EMB’s Mean Return is 0.83 points lower than that of IWP and its R-squared is 63.67 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than IWP. The Alpha and Beta of EMB are 1.92 points higher and 0.26 points higher than IWP’s Alpha and Beta.

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Performance

Annual Returns

EMB vs. IWP - Annual Returns

Year EMB IWP
2020 5.48% 35.29%
2019 15.57% 35.14%
2018 -5.67% -4.95%
2017 9.98% 24.98%
2016 9.41% 7.15%
2015 0.43% -0.39%
2014 6.69% 11.68%
2013 -7.42% 35.44%
2012 17.64% 15.62%
2011 7.2% -1.82%
2010 11.47% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

EMB vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EMB $10,000 $19,295 6.43%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

EMB’s CAGR is 10.31 percentage points lower than that of IWP and as a result, would have yielded $30,896 less on a $10,000 investment. Thus, EMB performed worse than IWP by 10.31% annually.


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