The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between IEMG and BSV? And which fund is better?
The expense ratio of IEMG is 0.06 percentage points higher than BSV’s (0.11% vs. 0.05%). IEMG also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, IEMG has provided higher returns than BSV over the past ten years.
In this article, we’ll compare IEMG vs. BSV. We’ll look at risk metrics and industry exposure, as well as at their fund composition and annual returns. Moreover, I’ll also discuss IEMG’s and BSV’s performance, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| IEMG | BSV | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Short-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 67.71B |
| Avg. Return | 7.41% | 2.27% |
| Div. Yield | 1.78% | 1.48% |
| Expense Ratio | 0.11% | 0.05% |
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 Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
IEMG’s dividend yield is 0.30% higher than that of BSV (1.78% vs. 1.48%). Also, IEMG yielded on average 5.14% more per year over the past decade (7.41% vs. 2.27%). The expense ratio of IEMG is 0.06 percentage points higher than BSV’s (0.11% vs. 0.05%).
Fund Composition
Holdings
| IEMG Holdings | Weight |
| 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% |
| Meituan | 1.52% |
| Naspers Ltd Class N | 0.93% |
| Vale SA | 0.91% |
| Reliance Industries Ltd Shs Dematerialised | 0.83% |
| China Construction Bank Corp Class H | 0.77% |
| Infosys Ltd | 0.74% |
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%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| IEMG | BSV | |
| Mean Return | 0 | 0.16 |
| R-squared | 0 | 78.38 |
| Std. Deviation | 0 | 1.33 |
| Alpha | 0 | 0.21 |
| Beta | 0 | 0.38 |
| Sharpe Ratio | 0 | 0.98 |
| Treynor Ratio | 0 | 3.33 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Mean Return of 0 with a Treynor Ratio of 0 and a Sharpe Ratio of 0. Its Beta is 0 while IEMG’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Alpha of 0.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Standard Deviation of 1.33 with a Alpha of 0.21 and a Sharpe Ratio of 0.98. Its Mean Return is 0.16 while BSV’s Beta is 0.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a R-squared of 78.38.
IEMG’s Mean Return is 0.16 points lower than that of BSV and its R-squared is 78.38 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than BSV. The Alpha and Beta of IEMG are 0.21 points lower and 0.38 points lower than BSV’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | BSV |
| 2020 | 18.18% | 4.67% |
| 2019 | 17.5% | 4.92% |
| 2018 | -14.69% | 1.34% |
| 2017 | 36.78% | 1.2% |
| 2016 | 9.98% | 1.42% |
| 2015 | -13.86% | 0.92% |
| 2014 | -2.04% | 1.32% |
| 2013 | -2.16% | 0.17% |
| 2012 | 0.0% | 1.98% |
| 2011 | 0.0% | 3.04% |
| 2010 | 0.0% | 4.0% |
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 BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| BSV | $10,000 | $11,679 | 2.27% |
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 BSV, the end total would have been $11,679. This equates to a $1,679 profit over 7 years and a compound annual growth rate (CAGR) of 2.27%.
IEMG’s CAGR is 5.14 percentage points higher than that of BSV and as a result, would have yielded $3,358 more on a $10,000 investment. Thus, IEMG outperformed BSV by 5.14% annually.
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