IEMG vs. SCHB: What’s The Difference?

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.

Summary

IEMG SCHB
Name iShares Core MSCI Emerging Markets ETF Schwab U.S. Broad Market ETF
Category Diversified Emerging Mkts Large Blend
Issuer iShares Schwab ETFs
AUM 83.68B 21.44B
Avg. Return 7.41% 14.43%
Div. Yield 1.78% 1.39%
Expense Ratio 0.11% 0.03%

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%).

Fund Composition

Industry Exposure

IEMG vs. SCHB - Industry Exposure

IEMG SCHB
Technology 20.44% 24.15%
Industrials 5.92% 9.29%
Energy 4.71% 2.78%
Communication Services 11.41% 10.52%
Utilities 2.13% 2.32%
Healthcare 5.73% 13.37%
Consumer Defensive 5.68% 5.76%
Real Estate 2.75% 3.58%
Financial Services 16.9% 13.88%
Consumer Cyclical 15.67% 11.9%
Basic Materials 8.64% 2.45%

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%).

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%.

SCHB - Holdings

SCHB Holdings Weight
Apple Inc 4.86%
Microsoft Corp 4.61%
Amazon.com Inc 3.33%
Facebook Inc A 1.88%
Alphabet Inc A 1.66%
Alphabet Inc Class C 1.61%
Berkshire Hathaway Inc Class B 1.19%
Tesla Inc 1.18%
NVIDIA Corp 1.13%
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%.

Risk Analysis

IEMG SCHB
Mean Return 0 1.23
R-squared 0 99.33
Std. Deviation 0 14.12
Alpha 0 -0.58
Beta 0 1.04
Sharpe Ratio 0 1
Treynor Ratio 0 13.58

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.

Performance

Annual Returns

IEMG vs. SCHB - Annual Returns

Year IEMG SCHB
2020 18.18% 20.77%
2019 17.5% 30.94%
2018 -14.69% -5.25%
2017 36.78% 21.18%
2016 9.98% 12.56%
2015 -13.86% 0.45%
2014 -2.04% 12.67%
2013 -2.16% 33.37%
2012 0.0% 16.22%
2011 0.0% 1.4%
2010 0.0% 17.1%

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.

Portfolio Growth

IEMG vs. SCHB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
SCHB $10,000 $23,130 14.43%

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.


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 Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply