The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IEMG and EMB? And which fund is better?
The expense ratio of IEMG is 0.28 percentage points lower than EMB’s (0.11% vs. 0.39%). IEMG also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, IEMG has provided higher returns than EMB over the past ten years.
In this article, we’ll compare IEMG vs. EMB. We’ll look at holdings and annual returns, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss IEMG’s and EMB’s risk metrics, fund composition, and performance and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Diversified Emerging Mkts||Emerging Markets 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 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%.
IEMG’s dividend yield is 2.07% lower than that of EMB (1.78% vs. 3.85%). Also, IEMG yielded on average 0.97% more per year over the past decade (7.41% vs. 6.43%). The expense ratio of IEMG is 0.28 percentage points lower than EMB’s (0.11% vs. 0.39%).
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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%.
|EMB Bond Sectors||Weight|
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.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a R-squared of 0 with a Mean Return of 0 and a Alpha of 0. Its Standard Deviation is 0 while IEMG’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Mean Return of 0.44 with a Standard Deviation of 8.44 and a Alpha of 0.89. Its R-squared is 23.34 while EMB’s Sharpe Ratio is 0.55. Furthermore, the fund has a Treynor Ratio of 3.24 and a Beta of 1.36.
IEMG’s Mean Return is 0.44 points lower than that of EMB and its R-squared is 23.34 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than EMB. The Alpha and Beta of IEMG are 0.89 points lower and 1.36 points lower than EMB’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 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.
|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 EMB, the end total would have been $14,825. This equates to a $4,825 profit over 7 years and a compound annual growth rate (CAGR) of 6.43%.
IEMG’s CAGR is 0.97 percentage points higher than that of EMB and as a result, would have yielded $212 more on a $10,000 investment. Thus, IEMG outperformed EMB by 0.97% annually.
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