The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and ITOT is a iShares Large Blend fund. So, what’s the difference between IEMG and ITOT? And which fund is better?
The expense ratio of IEMG is 0.08 percentage points higher than ITOT’s (0.11% vs. 0.03%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than ITOT over the past ten years.
In this article, we’ll compare IEMG vs. ITOT. We’ll look at holdings and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss IEMG’s and ITOT’s fund composition, portfolio growth, and industry exposure and examine how these affect their overall returns.
Summary
| IEMG | ITOT | |
| Name | iShares Core MSCI Emerging Markets ETF | iShares Core S&P Total U.S. Stock Market ETF |
| Category | Diversified Emerging Mkts | Large Blend |
| Issuer | iShares | iShares |
| AUM | 83.68B | 41.97B |
| Avg. Return | 7.41% | 14.59% |
| Div. Yield | 1.78% | 1.2% |
| Expense Ratio | 0.11% | 0.03% |
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 Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
IEMG’s dividend yield is 0.58% higher than that of ITOT (1.78% vs. 1.2%). Also, IEMG yielded on average 7.18% less per year over the past decade (7.41% vs. 14.59%). The expense ratio of IEMG is 0.08 percentage points higher than ITOT’s (0.11% vs. 0.03%).
Fund Composition
Industry Exposure
| IEMG | ITOT | |
| Technology | 20.44% | 24.49% |
| Industrials | 5.92% | 9.21% |
| Energy | 4.71% | 2.51% |
| Communication Services | 11.41% | 10.54% |
| Utilities | 2.13% | 2.35% |
| Healthcare | 5.73% | 13.59% |
| Consumer Defensive | 5.68% | 5.79% |
| Real Estate | 2.75% | 3.67% |
| Financial Services | 16.9% | 13.69% |
| Consumer Cyclical | 15.67% | 11.69% |
| Basic Materials | 8.64% | 2.47% |
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 Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
IEMG is 4.05% less exposed to the Technology sector than ITOT (20.44% vs 24.49%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.21% higher and 3.98% higher respectively (16.9% vs. 13.69% and 15.67% vs. 11.69%). In total, Real Estate, Energy, and Consumer Defensive also make up 1.17% more of the fund’s holdings compared to ITOT (13.14% vs. 11.97%).
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%.
| ITOT Holdings | Weight |
| Apple Inc | 5.07% |
| Microsoft Corp | 4.75% |
| Amazon.com Inc | 3.16% |
| Facebook Inc Class A | 1.89% |
| Alphabet Inc Class A | 1.79% |
| Alphabet Inc Class C | 1.71% |
| Tesla Inc | 1.17% |
| Berkshire Hathaway Inc Class B | 1.17% |
| NVIDIA Corp | 1.08% |
| JPMorgan Chase & Co | 1.02% |
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
Risk Analysis
| IEMG | ITOT | |
| Mean Return | 0 | 1.27 |
| R-squared | 0 | 99.4 |
| Std. Deviation | 0 | 14.02 |
| Alpha | 0 | -0.54 |
| Beta | 0 | 1.03 |
| Sharpe Ratio | 0 | 1.04 |
| Treynor Ratio | 0 | 14.13 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Mean Return of 0 with a R-squared of 0 and a Alpha of 0. Its Treynor Ratio is 0 while IEMG’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Beta of 0.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a R-squared of 99.4 with a Treynor Ratio of 14.13 and a Sharpe Ratio of 1.04. Its Alpha is -0.54 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 1.03.
IEMG’s Mean Return is 1.27 points lower than that of ITOT and its R-squared is 99.40 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than ITOT. The Alpha and Beta of IEMG are 0.54 points higher and 1.03 points lower than ITOT’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | ITOT |
| 2020 | 18.18% | 20.75% |
| 2019 | 17.5% | 30.87% |
| 2018 | -14.69% | -5.27% |
| 2017 | 36.78% | 21.23% |
| 2016 | 9.98% | 12.59% |
| 2015 | -13.86% | 0.96% |
| 2014 | -2.04% | 13.01% |
| 2013 | -2.16% | 32.67% |
| 2012 | 0.0% | 15.98% |
| 2011 | 0.0% | 1.55% |
| 2010 | 0.0% | 16.15% |
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 ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| ITOT | $10,000 | $23,312 | 14.59% |
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 ITOT, the end total would have been $23,312. This equates to a $13,312 profit over 7 years and a compound annual growth rate (CAGR) of 14.59%.
IEMG’s CAGR is 7.18 percentage points lower than that of ITOT and as a result, would have yielded $8,275 less on a $10,000 investment. Thus, IEMG performed worse than ITOT by 7.18% annually.
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