The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Information Technology Index Fund ETF Shares (VGT) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VGT is a Vanguard Technology fund. So, what’s the difference between IEMG and VGT? And which fund is better?
The expense ratio of IEMG is 0.01 percentage points higher than VGT’s (0.11% vs. 0.1%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VGT over the past ten years.
In this article, we’ll compare IEMG vs. VGT. We’ll look at performance and risk metrics, as well as at their holdings and industry exposure. Moreover, I’ll also discuss IEMG’s and VGT’s portfolio growth, annual returns, and fund composition and examine how these affect their overall returns.
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Summary
| IEMG | VGT | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Information Technology Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Technology |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 54.13B |
| Avg. Return | 7.41% | 20.84% |
| Div. Yield | 1.78% | 0.66% |
| Expense Ratio | 0.11% | 0.1% |
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 Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
IEMG’s dividend yield is 1.12% higher than that of VGT (1.78% vs. 0.66%). Also, IEMG yielded on average 13.43% less per year over the past decade (7.41% vs. 20.84%). The expense ratio of IEMG is 0.01 percentage points higher than VGT’s (0.11% vs. 0.1%).
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Fund Composition
Industry Exposure
| IEMG | VGT | |
| Technology | 20.44% | 88.89% |
| Industrials | 5.92% | 1.67% |
| Energy | 4.71% | 0.0% |
| Communication Services | 11.41% | 0.61% |
| Utilities | 2.13% | 0.0% |
| Healthcare | 5.73% | 0.0% |
| Consumer Defensive | 5.68% | 0.0% |
| Real Estate | 2.75% | 0.0% |
| Financial Services | 16.9% | 8.83% |
| Consumer Cyclical | 15.67% | 0.0% |
| Basic Materials | 8.64% | 0.0% |
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 Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
IEMG is 68.45% less exposed to the Technology sector than VGT (20.44% vs 88.89%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 8.07% higher and 15.67% higher respectively (16.9% vs. 8.83% and 15.67% vs. 0.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 13.14% more of the fund’s holdings compared to VGT (13.14% vs. 0.00%).
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%.
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
Risk Analysis
| IEMG | VGT | |
| Mean Return | 0 | 1.76 |
| R-squared | 0 | 74.84 |
| Std. Deviation | 0 | 16.61 |
| Alpha | 0 | 10.41 |
| Beta | 0 | 1.02 |
| Sharpe Ratio | 0 | 1.23 |
| Treynor Ratio | 0 | 20.55 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Beta of 0 with a Sharpe Ratio of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IEMG’s Mean Return is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Sharpe Ratio of 1.23 with a Beta of 1.02 and a Mean Return of 1.76. Its R-squared is 74.84 while VGT’s Standard Deviation is 16.61. Furthermore, the fund has a Treynor Ratio of 20.55 and a Alpha of 10.41.
IEMG’s Mean Return is 1.76 points lower than that of VGT and its R-squared is 74.84 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VGT. The Alpha and Beta of IEMG are 10.41 points lower and 1.02 points lower than VGT’s Alpha and Beta.
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Performance
Annual Returns
| Year | IEMG | VGT |
| 2020 | 18.18% | 45.94% |
| 2019 | 17.5% | 48.68% |
| 2018 | -14.69% | 2.52% |
| 2017 | 36.78% | 37.07% |
| 2016 | 9.98% | 13.73% |
| 2015 | -13.86% | 5.02% |
| 2014 | -2.04% | 18.01% |
| 2013 | -2.16% | 30.91% |
| 2012 | 0.0% | 14.05% |
| 2011 | 0.0% | 0.52% |
| 2010 | 0.0% | 12.74% |
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 VGT, returning 48.68% on an annual basis. The poorest year for VGT in the last ten years was 2011, with a yield of 0.52%. Most years the Vanguard Information Technology Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2014, when gains were 13.73%, 14.05%, and 18.01% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VGT | $10,000 | $42,977 | 20.84% |
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 VGT, the end total would have been $42,977. This equates to a $32,977 profit over 7 years and a compound annual growth rate (CAGR) of 20.84%.
IEMG’s CAGR is 13.43 percentage points lower than that of VGT and as a result, would have yielded $27,940 less on a $10,000 investment. Thus, IEMG performed worse than VGT by 13.43% annually.
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