The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between IEMG and GOVT? And which fund is better?
The expense ratio of IEMG is 0.06 percentage points higher than GOVT’s (0.11% vs. 0.05%). IEMG also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, IEMG has provided higher returns than GOVT over the past ten years.
In this article, we’ll compare IEMG vs. GOVT. We’ll look at portfolio growth and annual returns, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss IEMG’s and GOVT’s fund composition, holdings, and performance and examine how these affect their overall returns.
Summary
| IEMG | GOVT | |
| Name | iShares Core MSCI Emerging Markets ETF | iShares U.S. Treasury Bond ETF |
| Category | Diversified Emerging Mkts | Intermediate Government |
| Issuer | iShares | iShares |
| AUM | 83.68B | 17.07B |
| Avg. Return | 7.41% | 2.67% |
| Div. Yield | 1.78% | 1.0% |
| 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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.
IEMG’s dividend yield is 0.78% higher than that of GOVT (1.78% vs. 1.0%). Also, IEMG yielded on average 4.73% more per year over the past decade (7.41% vs. 2.67%). The expense ratio of IEMG is 0.06 percentage points higher than GOVT’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%.
| GOVT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IEMG | GOVT | |
| 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 Sharpe Ratio of 0 with a Alpha of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IEMG’s Beta is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Treynor Ratio is 0 while GOVT’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.
IEMG’s Mean Return is 0.00 points lower than that of GOVT and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than GOVT. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than GOVT’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | GOVT |
| 2020 | 18.18% | 7.92% |
| 2019 | 17.5% | 6.71% |
| 2018 | -14.69% | 0.74% |
| 2017 | 36.78% | 2.19% |
| 2016 | 9.98% | 0.92% |
| 2015 | -13.86% | 0.76% |
| 2014 | -2.04% | 4.99% |
| 2013 | -2.16% | -2.84% |
| 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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| GOVT | $10,000 | $12,656 | 2.67% |
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 GOVT, the end total would have been $12,656. This equates to a $2,656 profit over 7 years and a compound annual growth rate (CAGR) of 2.67%.
IEMG’s CAGR is 4.73 percentage points higher than that of GOVT and as a result, would have yielded $2,381 more on a $10,000 investment. Thus, IEMG outperformed GOVT by 4.73% annually.
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