IEMG vs. MDY: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between IEMG and MDY? And which fund is better?

The expense ratio of IEMG is 0.12 percentage points lower than MDY’s (0.11% vs. 0.23%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than MDY over the past ten years.

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

Summary

IEMG MDY
Name iShares Core MSCI Emerging Markets ETF SPDR S&P MIDCAP 400 ETF Trust
Category Diversified Emerging Mkts Mid-Cap Blend
Issuer iShares SPDR State Street Global Advisors
AUM 83.68B 21.31B
Avg. Return 7.41% 13.29%
Div. Yield 1.78% 0.94%
Expense Ratio 0.11% 0.23%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

IEMG’s dividend yield is 0.84% higher than that of MDY (1.78% vs. 0.94%). Also, IEMG yielded on average 5.88% less per year over the past decade (7.41% vs. 13.29%). The expense ratio of IEMG is 0.12 percentage points lower than MDY’s (0.11% vs. 0.23%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IEMG vs. MDY - Industry Exposure

IEMG MDY
Technology 20.44% 14.74%
Industrials 5.92% 17.88%
Energy 4.71% 2.52%
Communication Services 11.41% 1.63%
Utilities 2.13% 2.84%
Healthcare 5.73% 11.17%
Consumer Defensive 5.68% 4.2%
Real Estate 2.75% 9.66%
Financial Services 16.9% 15.2%
Consumer Cyclical 15.67% 14.89%
Basic Materials 8.64% 5.27%

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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

IEMG is 5.70% more exposed to the Technology sector than MDY (20.44% vs 14.74%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 1.70% higher and 0.78% higher respectively (16.9% vs. 15.2% and 15.67% vs. 14.89%). In total, Real Estate, Energy, and Consumer Defensive also make up 3.24% less of the fund’s holdings compared to MDY (13.14% vs. 16.38%).

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%.

MDY - Holdings

MDY Holdings Weight
Bio-Techne Corp 0.75%
Molina Healthcare Inc 0.63%
Cognex Corp 0.63%
Fair Isaac Corp 0.62%
XPO Logistics Inc 0.61%
SolarEdge Technologies Inc 0.61%
Signature Bank 0.6%
Graco Inc 0.55%
Camden Property Trust 0.55%
FactSet Research Systems Inc 0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IEMG MDY
Mean Return 0 1.08
R-squared 0 86.66
Std. Deviation 0 16.83
Alpha 0 -4.1
Beta 0 1.15
Sharpe Ratio 0 0.73
Treynor Ratio 0 9.97

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

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Mean Return of 1.08 with a Standard Deviation of 16.83 and a R-squared of 86.66. Its Alpha is -4.1 while MDY’s Treynor Ratio is 9.97. Furthermore, the fund has a Beta of 1.15 and a Sharpe Ratio of 0.73.

IEMG’s Mean Return is 1.08 points lower than that of MDY and its R-squared is 86.66 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than MDY. The Alpha and Beta of IEMG are 4.10 points higher and 1.15 points lower than MDY’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

IEMG vs. MDY - Annual Returns

Year IEMG MDY
2020 18.18% 13.51%
2019 17.5% 25.86%
2018 -14.69% -11.28%
2017 36.78% 15.89%
2016 9.98% 20.33%
2015 -13.86% -2.4%
2014 -2.04% 9.42%
2013 -2.16% 33.08%
2012 0.0% 17.58%
2011 0.0% -1.99%
2010 0.0% 26.17%

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 MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% respectively.

Portfolio Growth

IEMG vs. MDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
MDY $10,000 $18,875 13.29%

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 MDY, the end total would have been $18,875. This equates to a $8,875 profit over 7 years and a compound annual growth rate (CAGR) of 13.29%.

IEMG’s CAGR is 5.88 percentage points lower than that of MDY and as a result, would have yielded $3,838 less on a $10,000 investment. Thus, IEMG performed worse than MDY by 5.88% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply