IEMG vs. DGRO: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and DGRO is a iShares Large Value fund. So, what’s the difference between IEMG and DGRO? And which fund is better?

The expense ratio of IEMG is 0.03 percentage points higher than DGRO’s (0.11% vs. 0.08%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than DGRO over the past ten years.

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

Summary

IEMG DGRO
Name iShares Core MSCI Emerging Markets ETF iShares Core Dividend Growth ETF
Category Diversified Emerging Mkts Large Value
Issuer iShares iShares
AUM 83.68B 20B
Avg. Return 7.41% 12.46%
Div. Yield 1.78% 2.04%
Expense Ratio 0.11% 0.08%

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 Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

IEMG’s dividend yield is 0.26% lower than that of DGRO (1.78% vs. 2.04%). Also, IEMG yielded on average 5.05% less per year over the past decade (7.41% vs. 12.46%). The expense ratio of IEMG is 0.03 percentage points higher than DGRO’s (0.11% vs. 0.08%).

Fund Composition

Industry Exposure

IEMG vs. DGRO - Industry Exposure

IEMG DGRO
Technology 20.44% 18.98%
Industrials 5.92% 12.52%
Energy 4.71% 0.11%
Communication Services 11.41% 4.53%
Utilities 2.13% 7.34%
Healthcare 5.73% 17.55%
Consumer Defensive 5.68% 10.24%
Real Estate 2.75% 0.0%
Financial Services 16.9% 18.47%
Consumer Cyclical 15.67% 7.42%
Basic Materials 8.64% 2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

IEMG is 1.46% more exposed to the Technology sector than DGRO (20.44% vs 18.98%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 1.57% lower and 8.25% higher respectively (16.9% vs. 18.47% and 15.67% vs. 7.42%). In total, Real Estate, Energy, and Consumer Defensive also make up 2.79% more of the fund’s holdings compared to DGRO (13.14% vs. 10.35%).

Holdings

IEMG - 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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

Risk Analysis

IEMG DGRO
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

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 Mean Return is 0 while IEMG’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.

The iShares Core Dividend Growth ETF (DGRO) has a Alpha of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Beta is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.

IEMG’s Mean Return is 0.00 points lower than that of DGRO and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than DGRO. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than DGRO’s Alpha and Beta.

Performance

Annual Returns

IEMG vs. DGRO - Annual Returns

Year IEMG DGRO
2020 18.18% 9.47%
2019 17.5% 30.02%
2018 -14.69% -2.24%
2017 36.78% 22.84%
2016 9.98% 15.27%
2015 -13.86% -0.62%
2014 -2.04% 0.0%
2013 -2.16% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

IEMG vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,350 7.41%
DGRO $10,000 $19,580 12.46%

A $10,000 investment in IEMG would have resulted in a final balance of $15,350. This is a profit of $5,350 over 6 years and amounts to a compound annual growth rate (CAGR) of 7.41%.

With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.

IEMG’s CAGR is 5.05 percentage points lower than that of DGRO and as a result, would have yielded $4,230 less on a $10,000 investment. Thus, IEMG performed worse than DGRO by 5.05% annually.


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