IEMG vs. MBB: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between IEMG and MBB? And which fund is better?

The expense ratio of IEMG is 0.05 percentage points higher than MBB’s (0.11% vs. 0.06%). IEMG also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, IEMG has provided higher returns than MBB over the past ten years.

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

Summary

IEMG MBB
Name iShares Core MSCI Emerging Markets ETF iShares MBS ETF
Category Diversified Emerging Mkts Intermediate Government
Issuer iShares iShares
AUM 83.68B 25.69B
Avg. Return 7.41% 3.08%
Div. Yield 1.78% 1.88%
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

IEMG’s dividend yield is 0.10% lower than that of MBB (1.78% vs. 1.88%). Also, IEMG yielded on average 4.33% more per year over the past decade (7.41% vs. 3.08%). The expense ratio of IEMG is 0.05 percentage points higher than MBB’s (0.11% vs. 0.06%).

Fund Composition

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%.

MBB - Holdings

MBB Bond Sectors Weight
AAA 99.51%
Others 0.49%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

Risk Analysis

IEMG MBB
Mean Return 0 0.2
R-squared 0 74.38
Std. Deviation 0 2.12
Alpha 0 0.14
Beta 0 0.6
Sharpe Ratio 0 0.87
Treynor Ratio 0 3.02

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

The iShares MBS ETF (MBB) has a R-squared of 74.38 with a Mean Return of 0.2 and a Beta of 0.6. Its Sharpe Ratio is 0.87 while MBB’s Alpha is 0.14. Furthermore, the fund has a Treynor Ratio of 3.02 and a Standard Deviation of 2.12.

IEMG’s Mean Return is 0.20 points lower than that of MBB and its R-squared is 74.38 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than MBB. The Alpha and Beta of IEMG are 0.14 points lower and 0.60 points lower than MBB’s Alpha and Beta.

Performance

Annual Returns

IEMG vs. MBB - Annual Returns

Year IEMG MBB
2020 18.18% 4.03%
2019 17.5% 6.27%
2018 -14.69% 0.81%
2017 36.78% 2.37%
2016 9.98% 1.28%
2015 -13.86% 1.28%
2014 -2.04% 6.16%
2013 -2.16% -1.92%
2012 0.0% 2.23%
2011 0.0% 5.88%
2010 0.0% 5.44%

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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

IEMG vs. MBB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
MBB $10,000 $12,423 3.08%

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 MBB, the end total would have been $12,423. This equates to a $2,423 profit over 7 years and a compound annual growth rate (CAGR) of 3.08%.

IEMG’s CAGR is 4.33 percentage points higher than that of MBB and as a result, would have yielded $2,614 more on a $10,000 investment. Thus, IEMG outperformed MBB by 4.33% annually.


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