The iShares Core MSCI Emerging Markets ETF (IEMG) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between IEMG and SDY? And which fund is better?
The expense ratio of IEMG is 0.24 percentage points lower than SDY’s (0.11% vs. 0.35%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than SDY over the past ten years.
In this article, we’ll compare IEMG vs. SDY. We’ll look at performance and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss IEMG’s and SDY’s annual returns, portfolio growth, and holdings and examine how these affect their overall returns.
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Summary
| IEMG | SDY | |
| Name | iShares Core MSCI Emerging Markets ETF | SPDR S&P Dividend ETF |
| Category | Diversified Emerging Mkts | Large Value |
| Issuer | iShares | SPDR State Street Global Advisors |
| AUM | 83.68B | 19.67B |
| Avg. Return | 7.41% | 12.44% |
| Div. Yield | 1.78% | 2.65% |
| Expense Ratio | 0.11% | 0.35% |
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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.
IEMG’s dividend yield is 0.87% lower than that of SDY (1.78% vs. 2.65%). Also, IEMG yielded on average 5.03% less per year over the past decade (7.41% vs. 12.44%). The expense ratio of IEMG is 0.24 percentage points lower than SDY’s (0.11% vs. 0.35%).
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Fund Composition
Industry Exposure
| IEMG | SDY | |
| Technology | 20.44% | 2.0% |
| Industrials | 5.92% | 15.89% |
| Energy | 4.71% | 5.95% |
| Communication Services | 11.41% | 4.64% |
| Utilities | 2.13% | 12.14% |
| Healthcare | 5.73% | 7.35% |
| Consumer Defensive | 5.68% | 14.01% |
| Real Estate | 2.75% | 6.57% |
| Financial Services | 16.9% | 16.32% |
| Consumer Cyclical | 15.67% | 8.68% |
| Basic Materials | 8.64% | 6.45% |
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 SPDR S&P Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.
SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.
IEMG is 18.44% more exposed to the Technology sector than SDY (20.44% vs 2.0%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 0.58% higher and 6.99% higher respectively (16.9% vs. 16.32% and 15.67% vs. 8.68%). In total, Real Estate, Energy, and Consumer Defensive also make up 13.39% less of the fund’s holdings compared to SDY (13.14% vs. 26.53%).
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%.
| SDY Holdings | Weight |
| Exxon Mobil Corp | 2.81% |
| AT&T Inc | 2.5% |
| South Jersey Industries Inc | 2.22% |
| Chevron Corp | 2.02% |
| International Business Machines Corp | 2.0% |
| AbbVie Inc | 1.93% |
| National Retail Properties Inc | 1.86% |
| Federal Realty Investment Trust | 1.77% |
| Realty Income Corp | 1.7% |
| Old Republic International Corp | 1.65% |
SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.
AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.
Risk Analysis
| IEMG | SDY | |
| Mean Return | 0 | 1.07 |
| R-squared | 0 | 83.62 |
| Std. Deviation | 0 | 12.9 |
| Alpha | 0 | -0.1 |
| Beta | 0 | 0.87 |
| Sharpe Ratio | 0 | 0.95 |
| Treynor Ratio | 0 | 13.94 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Mean Return of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Beta is 0 while IEMG’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.
The SPDR S&P Dividend ETF (SDY) has a Mean Return of 1.07 with a Beta of 0.87 and a Alpha of -0.1. Its R-squared is 83.62 while SDY’s Treynor Ratio is 13.94. Furthermore, the fund has a Sharpe Ratio of 0.95 and a Standard Deviation of 12.9.
IEMG’s Mean Return is 1.07 points lower than that of SDY and its R-squared is 83.62 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than SDY. The Alpha and Beta of IEMG are 0.10 points higher and 0.87 points lower than SDY’s Alpha and Beta.
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Performance
Annual Returns
| Year | IEMG | SDY |
| 2020 | 18.18% | 1.78% |
| 2019 | 17.5% | 23.37% |
| 2018 | -14.69% | -2.73% |
| 2017 | 36.78% | 15.84% |
| 2016 | 9.98% | 20.17% |
| 2015 | -13.86% | -0.7% |
| 2014 | -2.04% | 13.8% |
| 2013 | -2.16% | 30.09% |
| 2012 | 0.0% | 11.51% |
| 2011 | 0.0% | 7.28% |
| 2010 | 0.0% | 16.41% |
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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| SDY | $10,000 | $19,213 | 12.44% |
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 SDY, the end total would have been $19,213. This equates to a $9,213 profit over 7 years and a compound annual growth rate (CAGR) of 12.44%.
IEMG’s CAGR is 5.03 percentage points lower than that of SDY and as a result, would have yielded $4,176 less on a $10,000 investment. Thus, IEMG performed worse than SDY by 5.03% annually.
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