The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Small-Cap Index Fund ETF Shares (VB) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VB is a Vanguard Small Blend fund. So, what’s the difference between IEMG and VB? And which fund is better?
The expense ratio of IEMG is 0.06 percentage points higher than VB’s (0.11% vs. 0.05%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VB over the past ten years.
In this article, we’ll compare IEMG vs. VB. We’ll look at risk metrics and fund composition, as well as at their performance and annual returns. Moreover, I’ll also discuss IEMG’s and VB’s holdings, portfolio growth, and industry exposure and examine how these affect their overall returns.
Summary
| IEMG | VB | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Small-Cap Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Small Blend |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 137.72B |
| Avg. Return | 7.41% | 14.25% |
| Div. Yield | 1.78% | 1.14% |
| Expense Ratio | 0.11% | 0.05% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
IEMG’s dividend yield is 0.64% higher than that of VB (1.78% vs. 1.14%). Also, IEMG yielded on average 6.85% less per year over the past decade (7.41% vs. 14.25%). The expense ratio of IEMG is 0.06 percentage points higher than VB’s (0.11% vs. 0.05%).
Fund Composition
Industry Exposure
| IEMG | VB | |
| Technology | 20.44% | 16.85% |
| Industrials | 5.92% | 16.11% |
| Energy | 4.71% | 3.67% |
| Communication Services | 11.41% | 2.4% |
| Utilities | 2.13% | 2.19% |
| Healthcare | 5.73% | 14.34% |
| Consumer Defensive | 5.68% | 4.14% |
| Real Estate | 2.75% | 9.56% |
| Financial Services | 16.9% | 13.06% |
| Consumer Cyclical | 15.67% | 13.03% |
| Basic Materials | 8.64% | 4.63% |
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 Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
IEMG is 3.59% more exposed to the Technology sector than VB (20.44% vs 16.85%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.84% higher and 2.64% higher respectively (16.9% vs. 13.06% and 15.67% vs. 13.03%). In total, Real Estate, Energy, and Consumer Defensive also make up 4.23% less of the fund’s holdings compared to VB (13.14% vs. 17.37%).
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%.
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
Risk Analysis
| IEMG | VB | |
| Mean Return | 0 | 1.15 |
| R-squared | 0 | 85.03 |
| Std. Deviation | 0 | 17.82 |
| Alpha | 0 | -4.02 |
| Beta | 0 | 1.21 |
| Sharpe Ratio | 0 | 0.74 |
| Treynor Ratio | 0 | 10.15 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a Alpha of 0 and a Beta of 0. Its Mean Return is 0 while IEMG’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Treynor Ratio of 10.15 with a Standard Deviation of 17.82 and a Alpha of -4.02. Its R-squared is 85.03 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a Mean Return of 1.15 and a Beta of 1.21.
IEMG’s Mean Return is 1.15 points lower than that of VB and its R-squared is 85.03 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VB. The Alpha and Beta of IEMG are 4.02 points higher and 1.21 points lower than VB’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | VB |
| 2020 | 18.18% | 19.08% |
| 2019 | 17.5% | 27.37% |
| 2018 | -14.69% | -9.3% |
| 2017 | 36.78% | 16.24% |
| 2016 | 9.98% | 18.31% |
| 2015 | -13.86% | -3.65% |
| 2014 | -2.04% | 7.51% |
| 2013 | -2.16% | 37.8% |
| 2012 | 0.0% | 18.22% |
| 2011 | 0.0% | -2.68% |
| 2010 | 0.0% | 27.89% |
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 VB, returning 37.8% on an annual basis. The poorest year for VB in the last ten years was 2018, with a yield of -9.3%. Most years the Vanguard Small-Cap Index Fund ETF Shares has given investors modest returns, such as in 2017, 2012, and 2016, when gains were 16.24%, 18.22%, and 18.31% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VB | $10,000 | $19,597 | 14.25% |
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 VB, the end total would have been $19,597. This equates to a $9,597 profit over 7 years and a compound annual growth rate (CAGR) of 14.25%.
IEMG’s CAGR is 6.85 percentage points lower than that of VB and as a result, would have yielded $4,560 less on a $10,000 investment. Thus, IEMG performed worse than VB by 6.85% annually.
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