The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between IEMG and IGSB? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than IGSB’s (0.11% vs. 0.06%). IEMG also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, IEMG has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare IEMG vs. IGSB. We’ll look at portfolio growth and performance, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss IEMG’s and IGSB’s industry exposure, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||iShares 1-5 Year Investment Grade Corporate Bond ETF|
|Category||Diversified Emerging Mkts||Short-Term 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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
IEMG’s dividend yield is 0.24% lower than that of IGSB (1.78% vs. 2.02%). Also, IEMG yielded on average 4.90% more per year over the past decade (7.41% vs. 2.51%). The expense ratio of IEMG is 0.05 percentage points higher than IGSB’s (0.11% vs. 0.06%).
|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%.
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Sharpe Ratio of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IEMG’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Mean Return of 0.19 with a Standard Deviation of 2 and a Treynor Ratio of 4.82. Its R-squared is 26.13 while IGSB’s Beta is 0.34. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Alpha of 0.69.
IEMG’s Mean Return is 0.19 points lower than that of IGSB and its R-squared is 26.13 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than IGSB. The Alpha and Beta of IEMG are 0.69 points lower and 0.34 points lower than IGSB’s Alpha and Beta.
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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% 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 IGSB, the end total would have been $11,950. This equates to a $1,950 profit over 7 years and a compound annual growth rate (CAGR) of 2.51%.
IEMG’s CAGR is 4.90 percentage points higher than that of IGSB and as a result, would have yielded $3,087 more on a $10,000 investment. Thus, IEMG outperformed IGSB by 4.90% annually.
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