The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VBR is a Vanguard Small Value fund. So, what’s the difference between IEMG and VBR? And which fund is better?
The expense ratio of IEMG is 0.04 percentage points higher than VBR’s (0.11% vs. 0.07%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VBR over the past ten years.
In this article, we’ll compare IEMG vs. VBR. We’ll look at portfolio growth and performance, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss IEMG’s and VBR’s annual returns, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| IEMG | VBR | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Small-Cap Value Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Small Value |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 48.08B |
| Avg. Return | 7.41% | 12.28% |
| Div. Yield | 1.78% | 1.6% |
| Expense Ratio | 0.11% | 0.07% |
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
IEMG’s dividend yield is 0.18% higher than that of VBR (1.78% vs. 1.6%). Also, IEMG yielded on average 4.87% less per year over the past decade (7.41% vs. 12.28%). The expense ratio of IEMG is 0.04 percentage points higher than VBR’s (0.11% vs. 0.07%).
Fund Composition
Industry Exposure
| IEMG | VBR | |
| Technology | 20.44% | 8.39% |
| Industrials | 5.92% | 18.44% |
| Energy | 4.71% | 5.15% |
| Communication Services | 11.41% | 1.77% |
| Utilities | 2.13% | 3.65% |
| Healthcare | 5.73% | 7.16% |
| Consumer Defensive | 5.68% | 4.36% |
| Real Estate | 2.75% | 10.92% |
| Financial Services | 16.9% | 20.04% |
| Consumer Cyclical | 15.67% | 13.82% |
| Basic Materials | 8.64% | 6.31% |
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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
IEMG is 12.05% more exposed to the Technology sector than VBR (20.44% vs 8.39%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.14% lower and 1.85% higher respectively (16.9% vs. 20.04% and 15.67% vs. 13.82%). In total, Real Estate, Energy, and Consumer Defensive also make up 7.29% less of the fund’s holdings compared to VBR (13.14% vs. 20.43%).
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%.
| VBR Holdings | Weight |
| Diamondback Energy Inc | 0.55% |
| VICI Properties Inc Ordinary Shares | 0.54% |
| IDEX Corp | 0.54% |
| Nuance Communications Inc | 0.5% |
| Molina Healthcare Inc | 0.48% |
| Signature Bank | 0.46% |
| Novavax Inc | 0.44% |
| Howmet Aerospace Inc | 0.44% |
| Apollo Global Management Inc Class A | 0.42% |
| Brown & Brown Inc | 0.41% |
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
Risk Analysis
| IEMG | VBR | |
| Mean Return | 0 | 1.08 |
| R-squared | 0 | 82.2 |
| Std. Deviation | 0 | 18.37 |
| Alpha | 0 | -5.09 |
| Beta | 0 | 1.23 |
| Sharpe Ratio | 0 | 0.67 |
| Treynor Ratio | 0 | 9.15 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Sharpe Ratio of 0 and a Treynor Ratio of 0. Its Beta is 0 while IEMG’s R-squared is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Standard Deviation of 18.37 with a Sharpe Ratio of 0.67 and a Treynor Ratio of 9.15. Its R-squared is 82.2 while VBR’s Alpha is -5.09. Furthermore, the fund has a Beta of 1.23 and a Mean Return of 1.08.
IEMG’s Mean Return is 1.08 points lower than that of VBR and its R-squared is 82.20 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VBR. The Alpha and Beta of IEMG are 5.09 points higher and 1.23 points lower than VBR’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | VBR |
| 2020 | 18.18% | 5.82% |
| 2019 | 17.5% | 22.76% |
| 2018 | -14.69% | -12.22% |
| 2017 | 36.78% | 11.79% |
| 2016 | 9.98% | 24.8% |
| 2015 | -13.86% | -4.67% |
| 2014 | -2.04% | 10.55% |
| 2013 | -2.16% | 36.57% |
| 2012 | 0.0% | 18.78% |
| 2011 | 0.0% | -4.05% |
| 2010 | 0.0% | 24.97% |
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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VBR | $10,000 | $16,765 | 12.28% |
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 VBR, the end total would have been $16,765. This equates to a $6,765 profit over 7 years and a compound annual growth rate (CAGR) of 12.28%.
IEMG’s CAGR is 4.87 percentage points lower than that of VBR and as a result, would have yielded $1,728 less on a $10,000 investment. Thus, IEMG performed worse than VBR by 4.87% annually.
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