The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VHT is a Vanguard Health fund. So, what’s the difference between IEMG and VHT? And which fund is better?
The expense ratio of IEMG is 0.01 percentage points higher than VHT’s (0.11% vs. 0.1%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VHT over the past ten years.
In this article, we’ll compare IEMG vs. VHT. We’ll look at portfolio growth and risk metrics, as well as at their fund composition and holdings. Moreover, I’ll also discuss IEMG’s and VHT’s industry exposure, annual returns, and performance and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Vanguard Health Care Index Fund ETF Shares|
|Category||Diversified Emerging Mkts||Health|
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
IEMG’s dividend yield is 0.63% higher than that of VHT (1.78% vs. 1.15%). Also, IEMG yielded on average 8.63% less per year over the past decade (7.41% vs. 16.04%). The expense ratio of IEMG is 0.01 percentage points higher than VHT’s (0.11% vs. 0.1%).
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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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
IEMG is 20.39% more exposed to the Technology sector than VHT (20.44% vs 0.05%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 16.88% higher and 15.67% higher respectively (16.9% vs. 0.02% 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 VHT (13.14% vs. 0.00%).
|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%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Sharpe Ratio of 0 with a Beta of 0 and a Treynor Ratio of 0. Its R-squared is 0 while IEMG’s Alpha is 0. Furthermore, the fund has a Mean Return of 0 and a Standard Deviation of 0.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Mean Return of 1.33 with a R-squared of 59.86 and a Treynor Ratio of 20.74. Its Standard Deviation is 13.58 while VHT’s Alpha is 7.99. Furthermore, the fund has a Beta of 0.75 and a Sharpe Ratio of 1.13.
IEMG’s Mean Return is 1.33 points lower than that of VHT and its R-squared is 59.86 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VHT. The Alpha and Beta of IEMG are 7.99 points lower and 0.75 points lower than VHT’s Alpha and Beta.
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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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $24,392. This equates to a $14,392 profit over 7 years and a compound annual growth rate (CAGR) of 16.04%.
IEMG’s CAGR is 8.63 percentage points lower than that of VHT and as a result, would have yielded $9,355 less on a $10,000 investment. Thus, IEMG performed worse than VHT by 8.63% annually.
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