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IEMG vs. SCHA: What’s The Difference?

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

The expense ratio of IEMG is 0.07 percentage points higher than SCHA’s (0.11% vs. 0.04%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than SCHA over the past ten years.

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

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Summary

IEMGSCHA
NameiShares Core MSCI Emerging Markets ETFSchwab U.S. Small-Cap ETF
CategoryDiversified Emerging MktsSmall Blend
IssueriSharesSchwab ETFs
AUM83.68B16.51B
Avg. Return7.41%12.62%
Div. Yield1.78%0.98%
Expense Ratio0.11%0.04%

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 Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.

IEMG’s dividend yield is 0.80% higher than that of SCHA (1.78% vs. 0.98%). Also, IEMG yielded on average 5.22% less per year over the past decade (7.41% vs. 12.62%). The expense ratio of IEMG is 0.07 percentage points higher than SCHA’s (0.11% vs. 0.04%).

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Fund Composition

Industry Exposure

IEMG vs. SCHA - Industry Exposure

IEMGSCHA
Technology20.44%14.91%
Industrials5.92%15.37%
Energy4.71%3.35%
Communication Services11.41%3.5%
Utilities2.13%1.83%
Healthcare5.73%16.5%
Consumer Defensive5.68%3.75%
Real Estate2.75%7.83%
Financial Services16.9%14.49%
Consumer Cyclical15.67%14.48%
Basic Materials8.64%3.98%

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 Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.

SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.

IEMG is 5.53% more exposed to the Technology sector than SCHA (20.44% vs 14.91%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 2.41% higher and 1.19% higher respectively (16.9% vs. 14.49% and 15.67% vs. 14.48%). In total, Real Estate, Energy, and Consumer Defensive also make up 1.79% less of the fund’s holdings compared to SCHA (13.14% vs. 14.93%).

Holdings

IEMG - Holdings

IEMG HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd5.37%
Tencent Holdings Ltd4.42%
Alibaba Group Holding Ltd Ordinary Shares4.38%
Samsung Electronics Co Ltd3.49%
Meituan1.52%
Naspers Ltd Class N0.93%
Vale SA0.91%
Reliance Industries Ltd Shs Dematerialised0.83%
China Construction Bank Corp Class H0.77%
Infosys Ltd0.74%

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%.

SCHA - Holdings

SCHA HoldingsWeight
AMC Entertainment Holdings Inc Class A0.67%
Caesars Entertainment Inc0.51%
Cloudflare Inc0.48%
NovoCure Ltd0.45%
Plug Power Inc0.41%
10x Genomics Inc Ordinary Shares – Class A0.34%
GameStop Corp Class A0.28%
RH0.27%
Penn National Gaming Inc0.27%
Axon Enterprise Inc0.27%

SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.

10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.

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Risk Analysis

IEMGSCHA
Mean Return01.14
R-squared082.26
Std. Deviation018.68
Alpha0-4.65
Beta01.25
Sharpe Ratio00.7
Treynor Ratio09.62

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

The Schwab U.S. Small-Cap ETF (SCHA) has a Treynor Ratio of 9.62 with a Mean Return of 1.14 and a Alpha of -4.65. Its Standard Deviation is 18.68 while SCHA’s Beta is 1.25. Furthermore, the fund has a R-squared of 82.26 and a Sharpe Ratio of 0.7.

IEMG’s Mean Return is 1.14 points lower than that of SCHA and its R-squared is 82.26 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SCHA. The Alpha and Beta of IEMG are 4.65 points higher and 1.25 points lower than SCHA’s Alpha and Beta.

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Performance

Annual Returns

IEMG vs. SCHA - Annual Returns

YearIEMGSCHA
202018.18%19.35%
201917.5%26.54%
2018-14.69%-11.75%
201736.78%15.04%
20169.98%19.88%
2015-13.86%-4.24%
2014-2.04%6.53%
2013-2.16%39.59%
20120.0%18.24%
20110.0%-2.95%
20100.0%28.31%

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 SCHA, returning 39.59% on an annual basis. The poorest year for SCHA in the last ten years was 2018, with a yield of -11.75%. Most years the Schwab U.S. Small-Cap ETF has given investors modest returns, such as in 2017, 2012, and 2020, when gains were 15.04%, 18.24%, and 19.35% respectively.

Portfolio Growth

IEMG vs. SCHA - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IEMG$10,000$15,0377.41%
SCHA$10,000$18,75012.62%

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 SCHA, the end total would have been $18,750. This equates to a $8,750 profit over 7 years and a compound annual growth rate (CAGR) of 12.62%.

IEMG’s CAGR is 5.22 percentage points lower than that of SCHA and as a result, would have yielded $3,713 less on a $10,000 investment. Thus, IEMG performed worse than SCHA by 5.22% annually.


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