The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and IAU is a iShares N/A fund. So, what’s the difference between IEMG and IAU? And which fund is better?
The expense ratio of IEMG is 0.14 percentage points lower than IAU’s (0.11% vs. 0.25%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided higher returns than IAU over the past ten years.
In this article, we’ll compare IEMG vs. IAU. We’ll look at annual returns and risk metrics, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss IEMG’s and IAU’s performance, fund composition, and holdings and examine how these affect their overall returns.
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Summary
| IEMG | IAU | |
| Name | iShares Core MSCI Emerging Markets ETF | iShares Gold Trust |
| Category | Diversified Emerging Mkts | N/A |
| Issuer | iShares | iShares |
| AUM | 83.68B | 28.61B |
| Avg. Return | 7.41% | 6.03% |
| Div. Yield | 1.78% | 0.0% |
| Expense Ratio | 0.11% | 0.25% |
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
IEMG’s dividend yield is 1.78% higher than that of IAU (1.78% vs. 0.0%). Also, IEMG yielded on average 1.38% more per year over the past decade (7.41% vs. 6.03%). The expense ratio of IEMG is 0.14 percentage points lower than IAU’s (0.11% vs. 0.25%).
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Fund Composition
Industry Exposure
| IEMG | IAU | |
| Technology | 20.44% | 0.0% |
| Industrials | 5.92% | 0.0% |
| Energy | 4.71% | 0.0% |
| Communication Services | 11.41% | 0.0% |
| Utilities | 2.13% | 0.0% |
| Healthcare | 5.73% | 0.0% |
| Consumer Defensive | 5.68% | 0.0% |
| Real Estate | 2.75% | 0.0% |
| Financial Services | 16.9% | 0.0% |
| Consumer Cyclical | 15.67% | 0.0% |
| Basic Materials | 8.64% | 0.0% |
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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IEMG is 20.44% more exposed to the Technology sector than IAU (20.44% vs 0.0%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 16.90% higher and 15.67% higher respectively (16.9% vs. 0.0% and 15.67% vs. 0.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 13.14% more of the fund’s holdings compared to IAU (13.14% vs. 0.00%).
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%.
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
Risk Analysis
| IEMG | IAU | |
| Mean Return | 0 | 0.23 |
| R-squared | 0 | 16.03 |
| Std. Deviation | 0 | 16.97 |
| Alpha | 0 | 4.16 |
| Beta | 0 | 0.48 |
| Sharpe Ratio | 0 | 0.13 |
| Treynor Ratio | 0 | 1.5 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a R-squared of 0 and a Sharpe Ratio of 0. Its Beta is 0 while IEMG’s Alpha is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
The iShares Gold Trust (IAU) has a Sharpe Ratio of 0.13 with a Mean Return of 0.23 and a Treynor Ratio of 1.5. Its R-squared is 16.03 while IAU’s Standard Deviation is 16.97. Furthermore, the fund has a Alpha of 4.16 and a Beta of 0.48.
IEMG’s Mean Return is 0.23 points lower than that of IAU and its R-squared is 16.03 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than IAU. The Alpha and Beta of IEMG are 4.16 points lower and 0.48 points lower than IAU’s Alpha and Beta.
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Performance
Annual Returns
| Year | IEMG | IAU |
| 2020 | 18.18% | 23.86% |
| 2019 | 17.5% | 18.54% |
| 2018 | -14.69% | -1.39% |
| 2017 | 36.78% | 11.58% |
| 2016 | 9.98% | 8.85% |
| 2015 | -13.86% | -11.65% |
| 2014 | -2.04% | -0.44% |
| 2013 | -2.16% | -27.96% |
| 2012 | 0.0% | 8.37% |
| 2011 | 0.0% | 8.66% |
| 2010 | 0.0% | 27.93% |
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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| IAU | $10,000 | $15,467 | 6.03% |
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 IAU, the end total would have been $15,467. This equates to a $5,467 profit over 7 years and a compound annual growth rate (CAGR) of 6.03%.
IEMG’s CAGR is 1.38 percentage points higher than that of IAU and as a result, would have yielded $430 less on a $10,000 investment. Thus, IEMG outperformed IAU by 1.38% annually.
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