The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and IJR is a iShares Small Blend fund. So, what’s the difference between IEMG and IJR? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than IJR’s (0.11% vs. 0.06%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than IJR over the past ten years.
In this article, we’ll compare IEMG vs. IJR. We’ll look at fund composition and performance, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss IEMG’s and IJR’s risk metrics, annual returns, and industry exposure and examine how these affect their overall returns.
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Summary
| IEMG | IJR | |
| Name | iShares Core MSCI Emerging Markets ETF | iShares Core S&P Small-Cap ETF |
| Category | Diversified Emerging Mkts | Small Blend |
| Issuer | iShares | iShares |
| AUM | 83.68B | 68.64B |
| Avg. Return | 7.41% | 13.97% |
| Div. Yield | 1.78% | 0.96% |
| Expense Ratio | 0.11% | 0.06% |
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 S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
IEMG’s dividend yield is 0.82% higher than that of IJR (1.78% vs. 0.96%). Also, IEMG yielded on average 6.56% less per year over the past decade (7.41% vs. 13.97%). The expense ratio of IEMG is 0.05 percentage points higher than IJR’s (0.11% vs. 0.06%).
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Fund Composition
Industry Exposure
| IEMG | IJR | |
| Technology | 20.44% | 14.32% |
| Industrials | 5.92% | 17.31% |
| Energy | 4.71% | 4.0% |
| Communication Services | 11.41% | 2.59% |
| Utilities | 2.13% | 1.8% |
| Healthcare | 5.73% | 11.55% |
| Consumer Defensive | 5.68% | 4.01% |
| Real Estate | 2.75% | 9.55% |
| Financial Services | 16.9% | 15.91% |
| Consumer Cyclical | 15.67% | 13.61% |
| Basic Materials | 8.64% | 5.34% |
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 S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.
IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.
IEMG is 6.12% more exposed to the Technology sector than IJR (20.44% vs 14.32%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 0.99% higher and 2.06% higher respectively (16.9% vs. 15.91% and 15.67% vs. 13.61%). In total, Real Estate, Energy, and Consumer Defensive also make up 4.42% less of the fund’s holdings compared to IJR (13.14% vs. 17.56%).
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%.
| IJR Holdings | Weight |
| BlackRock Cash Funds Treasury SL Agency | 1.08% |
| GameStop Corp Class A | 0.86% |
| Omnicell Inc | 0.61% |
| Stamps.com Inc | 0.58% |
| Saia Inc | 0.57% |
| Power Integrations Inc | 0.57% |
| Exponent Inc | 0.54% |
| NeoGenomics Inc | 0.53% |
| Chart Industries Inc | 0.53% |
| Macy’s Inc | 0.51% |
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
Risk Analysis
| IEMG | IJR | |
| Mean Return | 0 | 1.21 |
| R-squared | 0 | 76.03 |
| Std. Deviation | 0 | 18.68 |
| Alpha | 0 | -3.7 |
| Beta | 0 | 1.2 |
| Sharpe Ratio | 0 | 0.74 |
| Treynor Ratio | 0 | 10.77 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Mean Return of 0.
The iShares Core S&P Small-Cap ETF (IJR) has a R-squared of 76.03 with a Sharpe Ratio of 0.74 and a Mean Return of 1.21. Its Treynor Ratio is 10.77 while IJR’s Alpha is -3.7. Furthermore, the fund has a Standard Deviation of 18.68 and a Beta of 1.2.
IEMG’s Mean Return is 1.21 points lower than that of IJR and its R-squared is 76.03 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than IJR. The Alpha and Beta of IEMG are 3.70 points higher and 1.20 points lower than IJR’s Alpha and Beta.
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Performance
Annual Returns
| Year | IEMG | IJR |
| 2020 | 18.18% | 11.24% |
| 2019 | 17.5% | 22.79% |
| 2018 | -14.69% | -8.43% |
| 2017 | 36.78% | 13.2% |
| 2016 | 9.98% | 26.49% |
| 2015 | -13.86% | -2.0% |
| 2014 | -2.04% | 5.67% |
| 2013 | -2.16% | 41.36% |
| 2012 | 0.0% | 16.28% |
| 2011 | 0.0% | 0.9% |
| 2010 | 0.0% | 26.14% |
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 2013 was the strongest year for IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| IJR | $10,000 | $18,546 | 13.97% |
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 IJR, the end total would have been $18,546. This equates to a $8,546 profit over 7 years and a compound annual growth rate (CAGR) of 13.97%.
IEMG’s CAGR is 6.56 percentage points lower than that of IJR and as a result, would have yielded $3,509 less on a $10,000 investment. Thus, IEMG performed worse than IJR by 6.56% annually.
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