The iShares Core MSCI Emerging Markets ETF (IEMG) and the Schwab U.S. Broad Market ETF (SCHB) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and SCHB is a Schwab ETFs Large Blend fund. So, what’s the difference between IEMG and SCHB? And which fund is better?
The expense ratio of IEMG is 0.08 percentage points higher than SCHB’s (0.11% vs. 0.03%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than SCHB over the past ten years.
In this article, we’ll compare IEMG vs. SCHB. We’ll look at industry exposure and performance, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IEMG’s and SCHB’s holdings, risk metrics, and annual returns and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Schwab U.S. Broad Market 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 Schwab U.S. Broad Market ETF (SCHB) is a Large Blend fund that is issued by Schwab ETFs. It currently has 21.44B total assets under management and has yielded an average annual return of 14.43% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.03%.
IEMG’s dividend yield is 0.39% higher than that of SCHB (1.78% vs. 1.39%). Also, IEMG yielded on average 7.02% less per year over the past decade (7.41% vs. 14.43%). The expense ratio of IEMG is 0.08 percentage points higher than SCHB’s (0.11% vs. 0.03%).
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. Broad Market ETF (SCHB) has the most exposure to the Technology sector at 24.15%. This is followed by Financial Services and Healthcare at 13.88% and 13.37% respectively. Basic Materials (2.45%), Energy (2.78%), and Real Estate (3.58%) only make up 8.81% of the fund’s total assets.
SCHB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.76%, 9.29%, 10.52%, 11.9%, and 13.37%.
IEMG is 3.71% less exposed to the Technology sector than SCHB (20.44% vs 24.15%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.02% higher and 3.77% higher respectively (16.9% vs. 13.88% and 15.67% vs. 11.9%). In total, Real Estate, Energy, and Consumer Defensive also make up 1.02% more of the fund’s holdings compared to SCHB (13.14% vs. 12.12%).
|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%.
|Facebook Inc A||1.88%|
|Alphabet Inc A||1.66%|
|Alphabet Inc Class C||1.61%|
|Berkshire Hathaway Inc Class B||1.19%|
|JPMorgan Chase & Co||1.06%|
SCHB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 4.86%, 4.61%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.61%), Berkshire Hathaway Inc Class B (1.19%), and Tesla Inc (1.18%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHB’s holdings at 1.13% and 1.06%.
The iShares Core MSCI Emerging Markets ETF (IEMG) has a R-squared of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Treynor Ratio is 0 while IEMG’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Beta of 0.
The Schwab U.S. Broad Market ETF (SCHB) has a R-squared of 99.33 with a Treynor Ratio of 13.58 and a Mean Return of 1.23. Its Beta is 1.04 while SCHB’s Alpha is -0.58. Furthermore, the fund has a Standard Deviation of 14.12 and a Sharpe Ratio of 1.
IEMG’s Mean Return is 1.23 points lower than that of SCHB and its R-squared is 99.33 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SCHB. The Alpha and Beta of IEMG are 0.58 points higher and 1.04 points lower than SCHB’s Alpha and Beta.
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 SCHB, returning 33.37% on an annual basis. The poorest year for SCHB in the last ten years was 2018, with a yield of -5.25%. Most years the Schwab U.S. Broad Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.67%, 16.22%, and 17.1% 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 SCHB, the end total would have been $23,130. This equates to a $13,130 profit over 7 years and a compound annual growth rate (CAGR) of 14.43%.
IEMG’s CAGR is 7.02 percentage points lower than that of SCHB and as a result, would have yielded $8,093 less on a $10,000 investment. Thus, IEMG performed worse than SCHB by 7.02% annually.
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