IEMG vs. IWM: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares Russell 2000 ETF (IWM) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and IWM is a iShares Small Blend fund. So, what’s the difference between IEMG and IWM? And which fund is better?

The expense ratio of IEMG is 0.08 percentage points lower than IWM’s (0.11% vs. 0.19%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than IWM over the past ten years.

In this article, we’ll compare IEMG vs. IWM. We’ll look at performance and risk metrics, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss IEMG’s and IWM’s holdings, fund composition, and annual returns and examine how these affect their overall returns.

Summary

IEMG IWM
Name iShares Core MSCI Emerging Markets ETF iShares Russell 2000 ETF
Category Diversified Emerging Mkts Small Blend
Issuer iShares iShares
AUM 83.68B 66.48B
Avg. Return 7.41% 13.52%
Div. Yield 1.78% 0.86%
Expense Ratio 0.11% 0.19%

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 Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

IEMG’s dividend yield is 0.92% higher than that of IWM (1.78% vs. 0.86%). Also, IEMG yielded on average 6.11% less per year over the past decade (7.41% vs. 13.52%). The expense ratio of IEMG is 0.08 percentage points lower than IWM’s (0.11% vs. 0.19%).

Fund Composition

Industry Exposure

IEMG vs. IWM - Industry Exposure

IEMG IWM
Technology 20.44% 14.21%
Industrials 5.92% 14.78%
Energy 4.71% 3.74%
Communication Services 11.41% 3.79%
Utilities 2.13% 2.44%
Healthcare 5.73% 20.3%
Consumer Defensive 5.68% 3.65%
Real Estate 2.75% 8.59%
Financial Services 16.9% 13.76%
Consumer Cyclical 15.67% 10.99%
Basic Materials 8.64% 3.74%

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 Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

IEMG is 6.23% more exposed to the Technology sector than IWM (20.44% vs 14.21%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.14% higher and 4.68% higher respectively (16.9% vs. 13.76% and 15.67% vs. 10.99%). In total, Real Estate, Energy, and Consumer Defensive also make up 2.84% less of the fund’s holdings compared to IWM (13.14% vs. 15.98%).

Holdings

IEMG - 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%.

IWM - Holdings

IWM Holdings Weight
AMC Entertainment Holdings Inc Class A 0.52%
Intellia Therapeutics Inc 0.33%
Crocs Inc 0.3%
BlackRock Cash Funds Treasury SL Agency 0.29%
Tenet Healthcare Corp 0.26%
Lattice Semiconductor Corp 0.26%
Tetra Tech Inc 0.25%
II-VI Inc 0.25%
EastGroup Properties Inc 0.24%
Arrowhead Pharmaceuticals Inc 0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

Risk Analysis

IEMG IWM
Mean Return 0 1.12
R-squared 0 77.73
Std. Deviation 0 18.87
Alpha 0 -5.12
Beta 0 1.23
Sharpe Ratio 0 0.68
Treynor Ratio 0 9.56

The iShares Core MSCI Emerging Markets ETF (IEMG) has a Beta of 0 with a Mean Return of 0 and a R-squared of 0. Its Sharpe Ratio is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Alpha of 0.

The iShares Russell 2000 ETF (IWM) has a Beta of 1.23 with a Treynor Ratio of 9.56 and a Alpha of -5.12. Its Mean Return is 1.12 while IWM’s Sharpe Ratio is 0.68. Furthermore, the fund has a R-squared of 77.73 and a Standard Deviation of 18.87.

IEMG’s Mean Return is 1.12 points lower than that of IWM and its R-squared is 77.73 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than IWM. The Alpha and Beta of IEMG are 5.12 points higher and 1.23 points lower than IWM’s Alpha and Beta.

Performance

Annual Returns

IEMG vs. IWM - Annual Returns

Year IEMG IWM
2020 18.18% 19.89%
2019 17.5% 25.42%
2018 -14.69% -11.02%
2017 36.78% 14.66%
2016 9.98% 21.36%
2015 -13.86% -4.33%
2014 -2.04% 4.94%
2013 -2.16% 38.85%
2012 0.0% 16.39%
2011 0.0% -4.19%
2010 0.0% 26.76%

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 IWM, returning 38.85% on an annual basis. The poorest year for IWM in the last ten years was 2018, with a yield of -11.02%. Most years the iShares Russell 2000 ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 14.66%, 16.39%, and 19.89% respectively.

Portfolio Growth

IEMG vs. IWM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
IWM $10,000 $18,691 13.52%

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 IWM, the end total would have been $18,691. This equates to a $8,691 profit over 7 years and a compound annual growth rate (CAGR) of 13.52%.

IEMG’s CAGR is 6.11 percentage points lower than that of IWM and as a result, would have yielded $3,654 less on a $10,000 investment. Thus, IEMG performed worse than IWM by 6.11% annually.


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