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EMB vs. VXF: What’s The Difference?

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

The expense ratio of EMB is 0.33 percentage points higher than VXF’s (0.39% vs. 0.06%). EMB is mostly comprised of BBB bonds while VXF has a high exposure to the technology sector. Overall, EMB has provided lower returns than VXF over the past 11 years.

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

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Summary

EMBVXF
NameiShares J.P. Morgan USD Emerging Markets Bond ETFVanguard Extended Market Index Fund ETF Shares
CategoryEmerging Markets BondMid-Cap Growth
IssueriSharesVanguard
AUM19.76B114.53B
Avg. Return6.43%15.47%
Div. Yield3.85%1.19%
Expense Ratio0.39%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 Vanguard Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

EMB’s dividend yield is 2.66% higher than that of VXF (3.85% vs. 1.19%). Also, EMB yielded on average 9.04% less per year over the past decade (6.43% vs. 15.47%). The expense ratio of EMB is 0.33 percentage points higher than VXF’s (0.39% vs. 0.06%).

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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.

VXF - Holdings

VXF HoldingsWeight
Square Inc A1.2%
Zoom Video Communications Inc1.04%
Uber Technologies Inc0.93%
Moderna Inc0.9%
Blackstone Group Inc0.83%
Snap Inc Class A0.8%
Twilio Inc A0.73%
DocuSign Inc0.68%
CrowdStrike Holdings Inc Class A0.63%
Marvell Technology Inc0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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Risk Analysis

EMBVXF
Mean Return0.441.24
R-squared23.3485.73
Std. Deviation8.4418.04
Alpha0.89-3.26
Beta1.361.23
Sharpe Ratio0.550.79
Treynor Ratio3.2410.92

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 Sharpe Ratio of 0.55. Its Treynor Ratio is 3.24 while EMB’s Beta is 1.36. Furthermore, the fund has a R-squared of 23.34 and a Mean Return of 0.44.

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Mean Return of 1.24 and a Beta of 1.23. Its Sharpe Ratio is 0.79 while VXF’s Standard Deviation is 18.04. Furthermore, the fund has a Alpha of -3.26 and a R-squared of 85.73.

EMB’s Mean Return is 0.80 points lower than that of VXF and its R-squared is 62.39 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than VXF. The Alpha and Beta of EMB are 4.15 points higher and 0.13 points higher than VXF’s Alpha and Beta.

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Performance

Annual Returns

EMB vs. VXF - Annual Returns

YearEMBVXF
20205.48%32.19%
201915.57%28.04%
2018-5.67%-9.37%
20179.98%18.1%
20169.41%16.16%
20150.43%-3.26%
20146.69%7.55%
2013-7.42%38.37%
201217.64%18.48%
20117.2%-3.61%
201011.47%27.55%

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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

EMB vs. VXF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
EMB$10,000$19,2956.43%
VXF$10,000$44,13015.47%

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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.

EMB’s CAGR is 9.04 percentage points lower than that of VXF and as a result, would have yielded $24,835 less on a $10,000 investment. Thus, EMB performed worse than VXF by 9.04% annually.


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