The iShares Core MSCI Emerging Markets ETF (IEMG) and the Schwab U.S. Dividend Equity ETF (SCHD) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and SCHD is a Schwab ETFs Large Value fund. So, what’s the difference between IEMG and SCHD? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than SCHD’s (0.11% vs. 0.06%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than SCHD over the past ten years.
In this article, we’ll compare IEMG vs. SCHD. We’ll look at performance and annual returns, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IEMG’s and SCHD’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Schwab U.S. Dividend Equity ETF|
|Category||Diversified Emerging Mkts||Large Value|
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. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
IEMG’s dividend yield is 1.11% lower than that of SCHD (1.78% vs. 2.89%). Also, IEMG yielded on average 7.39% less per year over the past decade (7.41% vs. 14.80%). The expense ratio of IEMG is 0.05 percentage points higher than SCHD’s (0.11% vs. 0.06%).
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 Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
IEMG is 4.18% more exposed to the Technology sector than SCHD (20.44% vs 16.26%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 4.79% lower and 7.31% higher respectively (16.9% vs. 21.69% and 15.67% vs. 8.36%). In total, Real Estate, Energy, and Consumer Defensive also make up 2.77% less of the fund’s holdings compared to SCHD (13.14% vs. 15.91%).
|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%.
|Merck & Co Inc||4.24%|
|The Home Depot Inc||4.19%|
|Texas Instruments Inc||4.16%|
|Verizon Communications Inc||3.96%|
|Cisco Systems Inc||3.96%|
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
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 Sharpe Ratio of 0 with a Mean Return of 0 and a Beta of 0. Its Standard Deviation is 0 while IEMG’s Alpha is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.
The Schwab U.S. Dividend Equity ETF (SCHD) has a Beta of 0 with a Alpha of 0 and a Mean Return of 0. Its R-squared is 0 while SCHD’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
IEMG’s Mean Return is 0.00 points lower than that of SCHD and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SCHD. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than SCHD’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).
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 SCHD, returning 32.9% on an annual basis. The poorest year for SCHD in the last ten years was 2018, with a yield of -5.46%. Most years the Schwab U.S. Dividend Equity ETF has given investors modest returns, such as in 2012, 2014, and 2020, when gains were 11.4%, 11.66%, and 15.11% 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 SCHD, the end total would have been $21,688. This equates to a $11,688 profit over 7 years and a compound annual growth rate (CAGR) of 14.80%.
IEMG’s CAGR is 7.39 percentage points lower than that of SCHD and as a result, would have yielded $6,651 less on a $10,000 investment. Thus, IEMG performed worse than SCHD by 7.39% 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) 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.