The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IEMG and VTIP? And which fund is better?
The expense ratio of IEMG is 0.06 percentage points higher than VTIP’s (0.11% vs. 0.05%). IEMG also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, IEMG has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare IEMG vs. VTIP. We’ll look at annual returns and holdings, as well as at their performance and fund composition. Moreover, I’ll also discuss IEMG’s and VTIP’s risk metrics, industry exposure, and portfolio growth and examine how these affect their overall returns.
Summary
| IEMG | VTIP | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 50.67B |
| Avg. Return | 7.41% | 1.79% |
| Div. Yield | 1.78% | 1.35% |
| 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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
IEMG’s dividend yield is 0.43% higher than that of VTIP (1.78% vs. 1.35%). Also, IEMG yielded on average 5.61% more per year over the past decade (7.41% vs. 1.79%). The expense ratio of IEMG is 0.06 percentage points higher than VTIP’s (0.11% vs. 0.05%).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IEMG | VTIP | |
| Mean Return | 0 | 0 |
| R-squared | 0 | 0 |
| Std. Deviation | 0 | 0 |
| Alpha | 0 | 0 |
| Beta | 0 | 0 |
| Sharpe Ratio | 0 | 0 |
| Treynor Ratio | 0 | 0 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a Alpha of 0 and a R-squared of 0. Its Sharpe Ratio 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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Alpha of 0 with a Mean Return of 0 and a Beta of 0. Its Sharpe Ratio is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Standard Deviation of 0.
IEMG’s Mean Return is 0.00 points lower than that of VTIP and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VTIP. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | VTIP |
| 2020 | 18.18% | 4.97% |
| 2019 | 17.5% | 4.83% |
| 2018 | -14.69% | 0.54% |
| 2017 | 36.78% | 0.82% |
| 2016 | 9.98% | 2.71% |
| 2015 | -13.86% | -0.15% |
| 2014 | -2.04% | -1.17% |
| 2013 | -2.16% | -1.55% |
| 2012 | 0.0% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VTIP | $10,000 | $11,305 | 1.79% |
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 VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
IEMG’s CAGR is 5.61 percentage points higher than that of VTIP and as a result, would have yielded $3,732 more on a $10,000 investment. Thus, IEMG outperformed VTIP by 5.61% annually.
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