IEMG vs. VV: What’s The Difference?

The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Large-Cap Index Fund ETF Shares (VV) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VV is a Vanguard Large Blend fund. So, what’s the difference between IEMG and VV? And which fund is better?

The expense ratio of IEMG is 0.07 percentage points higher than VV’s (0.11% vs. 0.04%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VV over the past ten years.

In this article, we’ll compare IEMG vs. VV. We’ll look at risk metrics and industry exposure, as well as at their performance and annual returns. Moreover, I’ll also discuss IEMG’s and VV’s holdings, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

IEMG VV
Name iShares Core MSCI Emerging Markets ETF Vanguard Large-Cap Index Fund ETF Shares
Category Diversified Emerging Mkts Large Blend
Issuer iShares Vanguard
AUM 83.68B 37.65B
Avg. Return 7.41% 14.75%
Div. Yield 1.78% 1.26%
Expense Ratio 0.11% 0.04%

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 Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.

IEMG’s dividend yield is 0.52% higher than that of VV (1.78% vs. 1.26%). Also, IEMG yielded on average 7.34% less per year over the past decade (7.41% vs. 14.75%). The expense ratio of IEMG is 0.07 percentage points higher than VV’s (0.11% vs. 0.04%).

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Fund Composition

Industry Exposure

IEMG vs. VV - Industry Exposure

IEMG VV
Technology 20.44% 25.38%
Industrials 5.92% 8.39%
Energy 4.71% 2.62%
Communication Services 11.41% 11.68%
Utilities 2.13% 2.35%
Healthcare 5.73% 13.22%
Consumer Defensive 5.68% 6.06%
Real Estate 2.75% 2.7%
Financial Services 16.9% 13.82%
Consumer Cyclical 15.67% 11.65%
Basic Materials 8.64% 2.13%

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 Large-Cap Index Fund ETF Shares (VV) has the most exposure to the Technology sector at 25.38%. This is followed by Financial Services and Healthcare at 13.82% and 13.22% respectively. Utilities (2.35%), Energy (2.62%), and Real Estate (2.7%) only make up 7.67% of the fund’s total assets.

VV’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Consumer Cyclical, Communication Services, and Healthcare stocks at 6.06%, 8.39%, 11.65%, 11.68%, and 13.22%.

IEMG is 4.94% less exposed to the Technology sector than VV (20.44% vs 25.38%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 3.08% higher and 4.02% higher respectively (16.9% vs. 13.82% and 15.67% vs. 11.65%). In total, Real Estate, Energy, and Consumer Defensive also make up 1.76% more of the fund’s holdings compared to VV (13.14% vs. 11.38%).

Holdings

IEMG - 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%.

VV - Holdings

VV Holdings Weight
Apple Inc 5.7%
Microsoft Corp 5.35%
Amazon.com Inc 3.87%
Facebook Inc Class A 2.19%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.81%
Tesla Inc 1.37%
Berkshire Hathaway Inc Class B 1.3%
NVIDIA Corp 1.24%
JPMorgan Chase & Co 1.24%

VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.

Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.

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Risk Analysis

IEMG VV
Mean Return 0 1.24
R-squared 0 99.86
Std. Deviation 0 13.75
Alpha 0 -0.08
Beta 0 1.01
Sharpe Ratio 0 1.04
Treynor Ratio 0 14.14

The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a Mean Return of 0 and a R-squared of 0. Its Treynor Ratio is 0 while IEMG’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.

The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Alpha of -0.08 with a R-squared of 99.86 and a Beta of 1.01. Its Standard Deviation is 13.75 while VV’s Sharpe Ratio is 1.04. Furthermore, the fund has a Mean Return of 1.24 and a Treynor Ratio of 14.14.

IEMG’s Mean Return is 1.24 points lower than that of VV and its R-squared is 99.86 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VV. The Alpha and Beta of IEMG are 0.08 points higher and 1.01 points lower than VV’s Alpha and Beta.

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Performance

Annual Returns

IEMG vs. VV - Annual Returns

Year IEMG VV
2020 18.18% 20.99%
2019 17.5% 31.39%
2018 -14.69% -4.44%
2017 36.78% 22.03%
2016 9.98% 11.65%
2015 -13.86% 1.07%
2014 -2.04% 13.39%
2013 -2.16% 32.65%
2012 0.0% 16.09%
2011 0.0% 1.58%
2010 0.0% 15.81%

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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.

Portfolio Growth

IEMG vs. VV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IEMG $10,000 $15,037 7.41%
VV $10,000 $23,719 14.75%

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 VV, the end total would have been $23,719. This equates to a $13,719 profit over 7 years and a compound annual growth rate (CAGR) of 14.75%.

IEMG’s CAGR is 7.34 percentage points lower than that of VV and as a result, would have yielded $8,682 less on a $10,000 investment. Thus, IEMG performed worse than VV by 7.34% annually.


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