The iShares Core MSCI Emerging Markets ETF (IEMG) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and RSP is a Invesco Large Blend fund. So, what’s the difference between IEMG and RSP? And which fund is better?
The expense ratio of IEMG is 0.09 percentage points lower than RSP’s (0.11% vs. 0.2%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than RSP over the past ten years.
In this article, we’ll compare IEMG vs. RSP. We’ll look at performance and portfolio growth, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss IEMG’s and RSP’s fund composition, industry exposure, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Invesco S&P 500 Equal Weight ETF|
|Category||Diversified Emerging Mkts||Large Blend|
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 Invesco S&P 500 Equal Weight ETF (RSP) is a Large Blend fund that is issued by Invesco. It currently has 28.62B total assets under management and has yielded an average annual return of 13.79% over the past 10 years. The fund has a dividend yield of 1.31% with an expense ratio of 0.2%.
IEMG’s dividend yield is 0.47% higher than that of RSP (1.78% vs. 1.31%). Also, IEMG yielded on average 6.38% less per year over the past decade (7.41% vs. 13.79%). The expense ratio of IEMG is 0.09 percentage points lower than RSP’s (0.11% vs. 0.2%).
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).
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 Invesco S&P 500 Equal Weight ETF (RSP) has the most exposure to the Technology sector at 14.73%. This is followed by Industrials and Healthcare at 14.62% and 13.69% respectively. Basic Materials (4.04%), Communication Services (4.31%), and Utilities (5.58%) only make up 13.93% of the fund’s total assets.
RSP’s mid-section with moderate exposure is comprised of Real Estate, Consumer Defensive, Consumer Cyclical, Financial Services, and Healthcare stocks at 5.84%, 6.86%, 13.01%, 13.43%, and 13.69%.
IEMG is 5.71% more exposed to the Technology sector than RSP (20.44% vs 14.73%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.47% higher and 2.66% higher respectively (16.9% vs. 13.43% and 15.67% vs. 13.01%). In total, Real Estate, Energy, and Consumer Defensive also make up 3.46% less of the fund’s holdings compared to RSP (13.14% vs. 16.60%).
|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%|
|Naspers Ltd Class N||0.93%|
|Reliance Industries Ltd Shs Dematerialised||0.83%|
|China Construction Bank Corp Class H||0.77%|
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%.
|Chipotle Mexican Grill Inc||0.27%|
|Nike Inc Class B||0.25%|
|Monolithic Power Systems Inc||0.25%|
|Enphase Energy Inc||0.25%|
|Advanced Micro Devices Inc||0.25%|
|IDEXX Laboratories Inc||0.24%|
RSP’s Top Holdings are Chipotle Mexican Grill Inc, Nike Inc Class B, MSCI Inc, Monolithic Power Systems Inc, and Enphase Energy Inc at 0.27%, 0.25%, 0.25%, 0.25%, and 0.25%.
Advanced Micro Devices Inc (0.25%), ResMed Inc (0.24%), and PerkinElmer Inc (0.24%) have a slightly smaller but still significant weight. IDEXX Laboratories Inc and Danaher Corp are also represented in the RSP’s holdings at 0.24% and 0.24%.
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).
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Sharpe Ratio is 0 while IEMG’s Beta is 0. Furthermore, the fund has a R-squared of 0 and a Mean Return of 0.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Sharpe Ratio of 0.89 with a Beta of 1.1 and a R-squared of 94.47. Its Alpha is -2.45 while RSP’s Mean Return is 1.19. Furthermore, the fund has a Standard Deviation of 15.36 and a Treynor Ratio of 12.12.
IEMG’s Mean Return is 1.19 points lower than that of RSP and its R-squared is 94.47 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than RSP. The Alpha and Beta of IEMG are 2.45 points higher and 1.10 points lower than RSP’s Alpha and Beta.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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 RSP, returning 35.6% on an annual basis. The poorest year for RSP in the last ten years was 2018, with a yield of -7.77%. Most years the Invesco S&P 500 Equal Weight ETF has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 14.02%, 14.34%, and 17.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 RSP, the end total would have been $20,185. This equates to a $10,185 profit over 7 years and a compound annual growth rate (CAGR) of 13.79%.
IEMG’s CAGR is 6.38 percentage points lower than that of RSP and as a result, would have yielded $5,148 less on a $10,000 investment. Thus, IEMG performed worse than RSP by 6.38% annually.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.