The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and TLT is a iShares Long Government fund. So, what’s the difference between IEMG and TLT? And which fund is better?
The expense ratio of IEMG is 0.04 percentage points lower than TLT’s (0.11% vs. 0.15%). IEMG also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, IEMG has provided lower returns than TLT over the past ten years.
In this article, we’ll compare IEMG vs. TLT. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and performance. Moreover, I’ll also discuss IEMG’s and TLT’s annual returns, risk metrics, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||iShares 20+ Year Treasury Bond ETF|
|Category||Diversified Emerging Mkts||Long Government|
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 iShares 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
IEMG’s dividend yield is 0.28% higher than that of TLT (1.78% vs. 1.5%). Also, IEMG yielded on average 1.59% less per year over the past decade (7.41% vs. 9.00%). The expense ratio of IEMG is 0.04 percentage points lower than TLT’s (0.11% vs. 0.15%).
|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%.
|TLT Bond Sectors||Weight|
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Alpha is 0 while IEMG’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Treynor Ratio of 1.82 and a R-squared of 68.76. Its Sharpe Ratio is 0.55 while TLT’s Beta is 3.54. Furthermore, the fund has a Standard Deviation of 12.76 and a Alpha of -2.83.
IEMG’s Mean Return is 0.63 points lower than that of TLT and its R-squared is 68.76 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than TLT. The Alpha and Beta of IEMG are 2.83 points higher and 3.54 points lower than TLT’s Alpha and Beta.
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 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% 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 TLT, the end total would have been $18,352. This equates to a $8,352 profit over 7 years and a compound annual growth rate (CAGR) of 9.00%.
IEMG’s CAGR is 1.59 percentage points lower than that of TLT and as a result, would have yielded $3,315 less on a $10,000 investment. Thus, IEMG performed worse than TLT by 1.59% annually.
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