The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VIG is a Vanguard Large Blend fund. So, what’s the difference between IEMG and VIG? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than VIG’s (0.11% vs. 0.06%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VIG over the past ten years.
In this article, we’ll compare IEMG vs. VIG. We’ll look at risk metrics and portfolio growth, as well as at their performance and fund composition. Moreover, I’ll also discuss IEMG’s and VIG’s holdings, annual returns, and industry exposure and examine how these affect their overall returns.
Summary
| IEMG | VIG | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Dividend Appreciation Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 71.92B |
| Avg. Return | 7.41% | 13.35% |
| Div. Yield | 1.78% | 1.56% |
| Expense Ratio | 0.11% | 0.06% |
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 Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
IEMG’s dividend yield is 0.22% higher than that of VIG (1.78% vs. 1.56%). Also, IEMG yielded on average 5.94% less per year over the past decade (7.41% vs. 13.35%). The expense ratio of IEMG is 0.05 percentage points higher than VIG’s (0.11% vs. 0.06%).
Fund Composition
Industry Exposure
| IEMG | VIG | |
| Technology | 20.44% | 14.93% |
| Industrials | 5.92% | 17.23% |
| Energy | 4.71% | 0.0% |
| Communication Services | 11.41% | 2.86% |
| Utilities | 2.13% | 2.81% |
| Healthcare | 5.73% | 15.52% |
| Consumer Defensive | 5.68% | 15.32% |
| Real Estate | 2.75% | 0.0% |
| Financial Services | 16.9% | 17.18% |
| Consumer Cyclical | 15.67% | 10.47% |
| Basic Materials | 8.64% | 3.67% |
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 Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
IEMG is 5.51% more exposed to the Technology sector than VIG (20.44% vs 14.93%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 0.28% lower and 5.20% higher respectively (16.9% vs. 17.18% and 15.67% vs. 10.47%). In total, Real Estate, Energy, and Consumer Defensive also make up 2.18% less of the fund’s holdings compared to VIG (13.14% vs. 15.32%).
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%.
| VIG Holdings | Weight |
| Microsoft Corp | 4.19% |
| JPMorgan Chase & Co | 3.8% |
| Johnson & Johnson | 3.67% |
| Walmart Inc | 3.38% |
| Visa Inc Class A | 3.22% |
| UnitedHealth Group Inc | 3.22% |
| The Home Depot Inc | 2.91% |
| Procter & Gamble Co | 2.82% |
| Comcast Corp Class A | 2.21% |
| Coca-Cola Co | 1.98% |
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
Risk Analysis
| IEMG | VIG | |
| Mean Return | 0 | 1.09 |
| R-squared | 0 | 92.2 |
| Std. Deviation | 0 | 12.25 |
| Alpha | 0 | 0.12 |
| Beta | 0 | 0.86 |
| Sharpe Ratio | 0 | 1.01 |
| Treynor Ratio | 0 | 14.33 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its R-squared is 0 while IEMG’s Beta is 0. Furthermore, the fund has a Mean Return of 0 and a Treynor Ratio of 0.
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Treynor Ratio of 14.33 with a Beta of 0.86 and a Standard Deviation of 12.25. Its Mean Return is 1.09 while VIG’s Alpha is 0.12. Furthermore, the fund has a Sharpe Ratio of 1.01 and a R-squared of 92.2.
IEMG’s Mean Return is 1.09 points lower than that of VIG and its R-squared is 92.20 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VIG. The Alpha and Beta of IEMG are 0.12 points lower and 0.86 points lower than VIG’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | VIG |
| 2020 | 18.18% | 15.46% |
| 2019 | 17.5% | 29.71% |
| 2018 | -14.69% | -2.02% |
| 2017 | 36.78% | 22.22% |
| 2016 | 9.98% | 11.84% |
| 2015 | -13.86% | -1.95% |
| 2014 | -2.04% | 10.06% |
| 2013 | -2.16% | 28.99% |
| 2012 | 0.0% | 11.61% |
| 2011 | 0.0% | 6.21% |
| 2010 | 0.0% | 14.67% |
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 VIG, returning 29.71% on an annual basis. The poorest year for VIG in the last ten years was 2018, with a yield of -2.02%. Most years the Vanguard Dividend Appreciation Index Fund ETF Shares has given investors modest returns, such as in 2012, 2016, and 2010, when gains were 11.61%, 11.84%, and 14.67% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VIG | $10,000 | $21,645 | 13.35% |
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 VIG, the end total would have been $21,645. This equates to a $11,645 profit over 7 years and a compound annual growth rate (CAGR) of 13.35%.
IEMG’s CAGR is 5.94 percentage points lower than that of VIG and as a result, would have yielded $6,608 less on a $10,000 investment. Thus, IEMG performed worse than VIG by 5.94% annually.
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