The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and ACWI is a iShares N/A fund. So, what’s the difference between IEMG and ACWI? And which fund is better?
The expense ratio of IEMG is 0.21 percentage points lower than ACWI’s (0.11% vs. 0.32%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than ACWI over the past ten years.
In this article, we’ll compare IEMG vs. ACWI. We’ll look at industry exposure and holdings, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss IEMG’s and ACWI’s fund composition, performance, and risk metrics and examine how these affect their overall returns.
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|Name||iShares Core MSCI Emerging Markets ETF||iShares MSCI ACWI ETF|
|Category||Diversified Emerging Mkts||N/A|
The iShares Core MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
IEMG’s dividend yield is 0.39% higher than that of ACWI (1.78% vs. 1.39%). Also, IEMG yielded on average 2.81% less per year over the past decade (7.41% vs. 10.21%). The expense ratio of IEMG is 0.21 percentage points lower than ACWI’s (0.11% vs. 0.32%).
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The iShares Core MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.
IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
IEMG is 0.03% more exposed to the Technology sector than ACWI (20.44% vs 20.41%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 1.32% higher and 3.66% higher respectively (16.9% vs. 15.58% and 15.67% vs. 12.01%). In total, Real Estate, Energy, and Consumer Defensive also make up 0.24% less of the fund’s holdings compared to ACWI (13.14% vs. 13.38%).
|Taiwan Semiconductor Manufacturing Co Ltd||5.37%|
|Tencent Holdings Ltd||4.42%|
|Alibaba Group Holding Ltd Ordinary Shares||4.38%|
|Samsung Electronics Co Ltd||3.49%|
|Naspers Ltd Class N||0.93%|
|Reliance Industries Ltd Shs Dematerialised||0.83%|
|China Construction Bank Corp Class H||0.77%|
IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.
Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Beta is 0 while IEMG’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.
The iShares MSCI ACWI ETF (ACWI) has a Beta of 1 with a Sharpe Ratio of 0.71 and a Mean Return of 0.89. Its Standard Deviation is 14.05 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Treynor Ratio of 9.45 and a Alpha of 0.15.
IEMG’s Mean Return is 0.89 points lower than that of ACWI and its R-squared is 99.96 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than ACWI. The Alpha and Beta of IEMG are 0.15 points lower and 1.00 points lower than ACWI’s Alpha and Beta.
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IEMG had its best year in 2017 with an annual return of 36.78%. IEMG’s worst year over the past decade yielded -14.69% and occurred in 2018. In most years the iShares Core MSCI Emerging Markets ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IEMG would have resulted in a final balance of $15,037. This is a profit of $5,037 over 7 years and amounts to a compound annual growth rate (CAGR) of 7.41%.
With a $10,000 investment in ACWI, the end total would have been $18,413. This equates to a $8,413 profit over 7 years and a compound annual growth rate (CAGR) of 10.21%.
IEMG’s CAGR is 2.81 percentage points lower than that of ACWI and as a result, would have yielded $3,376 less on a $10,000 investment. Thus, IEMG performed worse than ACWI by 2.81% annually.
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