IEMG vs. USMV: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and USMV is a iShares Large Blend fund. So, what’s the difference between IEMG and USMV? And which fund is better?

The expense ratio of IEMG is 0.04 percentage points lower than USMV’s (0.11% vs. 0.15%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than USMV over the past ten years.

In this article, we’ll compare IEMG vs. USMV. We’ll look at fund composition and portfolio growth, as well as at their annual returns and holdings. Moreover, I’ll also discuss IEMG’s and USMV’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.

Summary

IEMG USMV
Name iShares Core MSCI Emerging Markets ETF iShares MSCI USA Min Vol Factor ETF
Category Diversified Emerging Mkts Large Blend
Issuer iShares iShares
AUM 83.68B 27.6B
Avg. Return 7.41% 13.89%
Div. Yield 1.78% 1.5%
Expense Ratio 0.11% 0.15%

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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% 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 USMV (1.78% vs. 1.5%). Also, IEMG yielded on average 6.49% less per year over the past decade (7.41% vs. 13.89%). The expense ratio of IEMG is 0.04 percentage points lower than USMV’s (0.11% vs. 0.15%).

Fund Composition

Industry Exposure

IEMG vs. USMV - Industry Exposure

IEMG USMV
Technology 20.44% 20.53%
Industrials 5.92% 10.51%
Energy 4.71% 0.21%
Communication Services 11.41% 11.03%
Utilities 2.13% 6.93%
Healthcare 5.73% 18.42%
Consumer Defensive 5.68% 12.82%
Real Estate 2.75% 2.73%
Financial Services 16.9% 9.65%
Consumer Cyclical 15.67% 5.53%
Basic Materials 8.64% 1.65%

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 iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

IEMG is 0.09% less exposed to the Technology sector than USMV (20.44% vs 20.53%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 7.25% higher and 10.14% higher respectively (16.9% vs. 9.65% and 15.67% vs. 5.53%). In total, Real Estate, Energy, and Consumer Defensive also make up 2.62% less of the fund’s holdings compared to USMV (13.14% vs. 15.76%).

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%.

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

Risk Analysis

IEMG USMV
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 Beta of 0 with a Alpha of 0 and a Standard Deviation of 0. Its Mean Return is 0 while IEMG’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Mean Return of 0 with a Standard Deviation of 0 and a Beta of 0. Its Sharpe Ratio is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.

IEMG’s Mean Return is 0.00 points lower than that of USMV and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than USMV. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than USMV’s Alpha and Beta.

Performance

Annual Returns

IEMG vs. USMV - Annual Returns

Year IEMG USMV
2020 18.18% 5.6%
2019 17.5% 27.77%
2018 -14.69% 1.36%
2017 36.78% 18.97%
2016 9.98% 10.5%
2015 -13.86% 5.5%
2014 -2.04% 16.34%
2013 -2.16% 25.11%
2012 0.0% 11.04%
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 2019 was the strongest year for USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.

Portfolio Growth

IEMG vs. USMV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
USMV $10,000 $22,066 13.89%

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 USMV, the end total would have been $22,066. This equates to a $12,066 profit over 7 years and a compound annual growth rate (CAGR) of 13.89%.

IEMG’s CAGR is 6.49 percentage points lower than that of USMV and as a result, would have yielded $7,029 less on a $10,000 investment. Thus, IEMG performed worse than USMV by 6.49% annually.


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