The iShares Core MSCI Emerging Markets ETF (IEMG) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between IEMG and SCHF? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than SCHF’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 higher returns than SCHF over the past ten years.
In this article, we’ll compare IEMG vs. SCHF. We’ll look at fund composition and holdings, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss IEMG’s and SCHF’s portfolio growth, performance, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Schwab International Equity ETF|
|Category||Diversified Emerging Mkts||Foreign 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 International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.
IEMG’s dividend yield is 0.38% lower than that of SCHF (1.78% vs. 2.16%). Also, IEMG yielded on average 0.98% more per year over the past decade (7.41% vs. 6.43%). The expense ratio of IEMG is 0.05 percentage points higher than SCHF’s (0.11% vs. 0.06%).
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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 International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.
SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.
IEMG is 8.89% more exposed to the Technology sector than SCHF (20.44% vs 11.55%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 0.95% lower and 4.80% higher respectively (16.9% vs. 17.85% and 15.67% vs. 10.87%). In total, Real Estate, Energy, and Consumer Defensive also make up 3.67% less of the fund’s holdings compared to SCHF (13.14% vs. 16.81%).
|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%.
|Samsung Electronics Co Ltd||1.6%|
|ASML Holding NV||1.29%|
|Roche Holding AG||1.24%|
|Toyota Motor Corp||1.02%|
|LVMH Moet Hennessy Louis Vuitton SE||0.93%|
|Shopify Inc A||0.78%|
SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.
LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Beta of 0 and a Standard Deviation of 0. Its Treynor Ratio is 0 while IEMG’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.
The Schwab International Equity ETF (SCHF) has a Mean Return of 0.58 with a Sharpe Ratio of 0.42 and a Standard Deviation of 15.08. Its Beta is 0.99 while SCHF’s Treynor Ratio is 5.39. Furthermore, the fund has a R-squared of 98.16 and a Alpha of 0.53.
IEMG’s Mean Return is 0.58 points lower than that of SCHF and its R-squared is 98.16 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SCHF. The Alpha and Beta of IEMG are 0.53 points lower and 0.99 points lower than SCHF’s Alpha and Beta.
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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 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% 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 SCHF, the end total would have been $13,865. This equates to a $3,865 profit over 7 years and a compound annual growth rate (CAGR) of 6.43%.
IEMG’s CAGR is 0.98 percentage points higher than that of SCHF and as a result, would have yielded $1,172 more on a $10,000 investment. Thus, IEMG outperformed SCHF by 0.98% annually.
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