IAU vs. EMB: What’s The Difference?

The iShares Gold Trust (IAU) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IAU is a iShares N/A fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IAU and EMB? And which fund is better?

The expense ratio of IAU is 0.14 percentage points lower than EMB’s (0.25% vs. 0.39%). IAU also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, IAU has provided lower returns than EMB over the past 11 years.

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

Summary

IAU EMB
Name iShares Gold Trust iShares J.P. Morgan USD Emerging Markets Bond ETF
Category N/A Emerging Markets Bond
Issuer iShares iShares
AUM 28.61B 19.76B
Avg. Return 6.03% 6.43%
Div. Yield 0.0% 3.85%
Expense Ratio 0.25% 0.39%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

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%.

IAU’s dividend yield is 3.85% lower than that of EMB (0.0% vs. 3.85%). Also, IAU yielded on average 0.40% less per year over the past decade (6.03% vs. 6.43%). The expense ratio of IAU is 0.14 percentage points lower than EMB’s (0.25% vs. 0.39%).

Fund Composition

Holdings

IAU - Holdings

IAU Holdings Weight
Gold 100.0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%
N/A 0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

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.

Risk Analysis

IAU EMB
Mean Return 0.23 0.44
R-squared 16.03 23.34
Std. Deviation 16.97 8.44
Alpha 4.16 0.89
Beta 0.48 1.36
Sharpe Ratio 0.13 0.55
Treynor Ratio 1.5 3.24

The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a R-squared of 16.03 and a Treynor Ratio of 1.5. Its Alpha is 4.16 while IAU’s Sharpe Ratio is 0.13. Furthermore, the fund has a Standard Deviation of 16.97 and a Beta of 0.48.

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

IAU’s Mean Return is 0.21 points lower than that of EMB and its R-squared is 7.31 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than EMB. The Alpha and Beta of IAU are 3.27 points higher and 0.88 points lower than EMB’s Alpha and Beta.

Performance

Annual Returns

IAU vs. EMB - Annual Returns

Year IAU EMB
2020 23.86% 5.48%
2019 18.54% 15.57%
2018 -1.39% -5.67%
2017 11.58% 9.98%
2016 8.85% 9.41%
2015 -11.65% 0.43%
2014 -0.44% 6.69%
2013 -27.96% -7.42%
2012 8.37% 17.64%
2011 8.66% 7.2%
2010 27.93% 11.47%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.

Portfolio Growth

IAU vs. EMB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IAU $10,000 $16,786 6.03%
EMB $10,000 $19,295 6.43%

A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.

IAU’s CAGR is 0.40 percentage points lower than that of EMB and as a result, would have yielded $2,509 less on a $10,000 investment. Thus, IAU performed worse than EMB by 0.40% annually.


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