The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between IEMG and BIV? And which fund is better?
The expense ratio of IEMG is 0.06 percentage points higher than BIV’s (0.11% vs. 0.05%). IEMG also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, IEMG has provided higher returns than BIV over the past ten years.
In this article, we’ll compare IEMG vs. BIV. We’ll look at risk metrics and performance, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss IEMG’s and BIV’s industry exposure, holdings, and annual returns and examine how these affect their overall returns.
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|Name||iShares Core MSCI Emerging Markets ETF||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Diversified Emerging Mkts||Intermediate-Term Bond|
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 Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
IEMG’s dividend yield is 0.28% lower than that of BIV (1.78% vs. 2.06%). Also, IEMG yielded on average 2.09% more per year over the past decade (7.41% vs. 5.31%). The expense ratio of IEMG is 0.06 percentage points higher than BIV’s (0.11% vs. 0.05%).
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|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%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Standard Deviation is 0 while IEMG’s Beta is 0. Furthermore, the fund has a R-squared of 0 and a Treynor Ratio of 0.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Sharpe Ratio of 0.89 and a R-squared of 95.12. Its Mean Return is 0.35 while BIV’s Treynor Ratio is 2.72. Furthermore, the fund has a Alpha of -0.07 and a Beta of 1.33.
IEMG’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than BIV. The Alpha and Beta of IEMG are 0.07 points higher and 1.33 points lower than BIV’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 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% 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 BIV, the end total would have been $13,968. This equates to a $3,968 profit over 7 years and a compound annual growth rate (CAGR) of 5.31%.
IEMG’s CAGR is 2.09 percentage points higher than that of BIV and as a result, would have yielded $1,069 more on a $10,000 investment. Thus, IEMG outperformed BIV by 2.09% annually.
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