EMB vs. VBK: What’s The Difference?

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

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

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

Summary

EMB VBK
Name iShares J.P. Morgan USD Emerging Markets Bond ETF Vanguard Small-Cap Growth Index Fund ETF Shares
Category Emerging Markets Bond Small Growth
Issuer iShares Vanguard
AUM 19.76B 37.89B
Avg. Return 6.43% 16.53%
Div. Yield 3.85% 0.45%
Expense Ratio 0.39% 0.07%

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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

EMB’s dividend yield is 3.40% higher than that of VBK (3.85% vs. 0.45%). Also, EMB yielded on average 10.09% less per year over the past decade (6.43% vs. 16.53%). The expense ratio of EMB is 0.32 percentage points higher than VBK’s (0.39% vs. 0.07%).

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.

VBK - Holdings

VBK Holdings Weight
Charles River Laboratories International Inc 0.78%
Pool Corp 0.73%
Bio-Techne Corp 0.73%
Avantor Inc 0.73%
PerkinElmer Inc 0.72%
Entegris Inc 0.7%
PTC Inc 0.62%
Fair Isaac Corp 0.57%
Bill.com Holdings Inc Ordinary Shares 0.56%
Avalara Inc 0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

Risk Analysis

EMB VBK
Mean Return 0.44 1.22
R-squared 23.34 80.56
Std. Deviation 8.44 17.95
Alpha 0.89 -2.81
Beta 1.36 1.18
Sharpe Ratio 0.55 0.78
Treynor Ratio 3.24 11.18

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

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Mean Return of 1.22 and a Alpha of -2.81. Its R-squared is 80.56 while VBK’s Sharpe Ratio is 0.78. Furthermore, the fund has a Standard Deviation of 17.95 and a Treynor Ratio of 11.18.

EMB’s Mean Return is 0.78 points lower than that of VBK and its R-squared is 57.22 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than VBK. The Alpha and Beta of EMB are 3.70 points higher and 0.18 points higher than VBK’s Alpha and Beta.

Performance

Annual Returns

EMB vs. VBK - Annual Returns

Year EMB VBK
2020 5.48% 35.29%
2019 15.57% 32.75%
2018 -5.67% -5.68%
2017 9.98% 21.9%
2016 9.41% 10.74%
2015 0.43% -2.51%
2014 6.69% 4.02%
2013 -7.42% 38.18%
2012 17.64% 17.67%
2011 7.2% -1.43%
2010 11.47% 30.87%

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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% respectively.

Portfolio Growth

EMB vs. VBK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EMB $10,000 $19,295 6.43%
VBK $10,000 $48,639 16.53%

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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.

EMB’s CAGR is 10.09 percentage points lower than that of VBK and as a result, would have yielded $29,344 less on a $10,000 investment. Thus, EMB performed worse than VBK by 10.09% annually.


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