IEMG vs. SCHD: What’s The Difference?

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.

Summary

IEMG SCHD
Name iShares Core MSCI Emerging Markets ETF Schwab U.S. Dividend Equity ETF
Category Diversified Emerging Mkts Large Value
Issuer iShares Schwab ETFs
AUM 83.68B 26B
Avg. Return 7.41% 14.80%
Div. Yield 1.78% 2.89%
Expense Ratio 0.11% 0.06%

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%).

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Fund Composition

Industry Exposure

IEMG vs. SCHD - Industry Exposure

IEMG SCHD
Technology 20.44% 16.26%
Industrials 5.92% 18.05%
Energy 4.71% 1.87%
Communication Services 11.41% 4.96%
Utilities 2.13% 0.0%
Healthcare 5.73% 12.64%
Consumer Defensive 5.68% 14.04%
Real Estate 2.75% 0.0%
Financial Services 16.9% 21.69%
Consumer Cyclical 15.67% 8.36%
Basic Materials 8.64% 2.13%

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%).

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%.

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
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%.

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Risk Analysis

IEMG SCHD
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

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.

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Performance

Annual Returns

IEMG vs. SCHD - Annual Returns

Year IEMG SCHD
2020 18.18% 15.11%
2019 17.5% 27.28%
2018 -14.69% -5.46%
2017 36.78% 20.88%
2016 9.98% 16.25%
2015 -13.86% -0.21%
2014 -2.04% 11.66%
2013 -2.16% 32.9%
2012 0.0% 11.4%
2011 0.0% 0.0%
2010 0.0% 0.0%

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.

Portfolio Growth

IEMG vs. SCHD - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
SCHD $10,000 $21,688 14.80%

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.


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