The iShares Core MSCI Emerging Markets ETF (IEMG) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between IEMG and SCHG? And which fund is better?
The expense ratio of IEMG is 0.07 percentage points higher than SCHG’s (0.11% vs. 0.04%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than SCHG over the past ten years.
In this article, we’ll compare IEMG vs. SCHG. We’ll look at performance and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss IEMG’s and SCHG’s risk metrics, portfolio growth, and fund composition and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Schwab U.S. Large-Cap Growth ETF|
|Category||Diversified Emerging Mkts||Large Growth|
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. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
IEMG’s dividend yield is 1.35% higher than that of SCHG (1.78% vs. 0.43%). Also, IEMG yielded on average 10.40% less per year over the past decade (7.41% vs. 17.81%). The expense ratio of IEMG is 0.07 percentage points higher than SCHG’s (0.11% vs. 0.04%).
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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 U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.
SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.
IEMG is 18.77% less exposed to the Technology sector than SCHG (20.44% vs 39.21%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 8.92% higher and 0.66% higher respectively (16.9% vs. 7.98% and 15.67% vs. 15.01%). In total, Real Estate, Energy, and Consumer Defensive also make up 9.15% more of the fund’s holdings compared to SCHG (13.14% vs. 3.99%).
|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||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a Mean Return of 0 and a R-squared of 0. Its Beta is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a R-squared of 92.92 and a Treynor Ratio of 16.3. Its Sharpe Ratio is 1.14 while SCHG’s Beta is 1.05. Furthermore, the fund has a Standard Deviation of 14.78 and a Alpha of 1.97.
IEMG’s Mean Return is 1.46 points lower than that of SCHG and its R-squared is 92.92 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SCHG. The Alpha and Beta of IEMG are 1.97 points lower and 1.05 points lower than SCHG’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 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% 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 SCHG, the end total would have been $30,541. This equates to a $20,541 profit over 7 years and a compound annual growth rate (CAGR) of 17.81%.
IEMG’s CAGR is 10.40 percentage points lower than that of SCHG and as a result, would have yielded $15,504 less on a $10,000 investment. Thus, IEMG performed worse than SCHG by 10.40% annually.
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