The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard Total International Stock Index Fund ETF Shares (VXUS) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VXUS is a Vanguard Foreign Large Blend fund. So, what’s the difference between IEMG and VXUS? And which fund is better?
The expense ratio of IEMG is 0.03 percentage points higher than VXUS’s (0.11% vs. 0.08%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than VXUS over the past ten years.
In this article, we’ll compare IEMG vs. VXUS. 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 VXUS’s fund composition, portfolio growth, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Vanguard Total International Stock Index Fund ETF Shares|
|Category||Diversified Emerging Mkts||Foreign Large Blend|
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 Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% with an expense ratio of 0.08%.
IEMG’s dividend yield is 0.66% lower than that of VXUS (1.78% vs. 2.44%). Also, IEMG yielded on average 1.00% less per year over the past decade (7.41% vs. 8.41%). The expense ratio of IEMG is 0.03 percentage points higher than VXUS’s (0.11% vs. 0.08%).
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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 Total International Stock Index Fund ETF Shares (VXUS) has the most exposure to the Financial Services sector at 17.64%. This is followed by Technology and Industrials at 13.07% and 12.94% respectively. Real Estate (3.79%), Energy (4.55%), and Communication Services (7.06%) only make up 15.40% of the fund’s total assets.
VXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 7.83%, 8.37%, 9.19%, 12.64%, and 12.94%.
IEMG is 7.37% more exposed to the Technology sector than VXUS (20.44% vs 13.07%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 0.74% lower and 3.03% higher respectively (16.9% vs. 17.64% and 15.67% vs. 12.64%). In total, Real Estate, Energy, and Consumer Defensive also make up 3.03% less of the fund’s holdings compared to VXUS (13.14% vs. 16.17%).
|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%.
|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|Samsung Electronics Co Ltd||1.05%|
|ASML Holding NV||0.86%|
|Roche Holding AG||0.81%|
|Toyota Motor Corp||0.67%|
|LVMH Moet Hennessy Louis Vuitton SE||0.61%|
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Mean Return of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Beta is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Sharpe Ratio of 0.4 with a Standard Deviation of 15.12 and a Beta of 0.99. Its Mean Return is 0.56 while VXUS’s Treynor Ratio is 5.14. Furthermore, the fund has a R-squared of 98.39 and a Alpha of 0.31.
IEMG’s Mean Return is 0.56 points lower than that of VXUS and its R-squared is 98.39 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VXUS. The Alpha and Beta of IEMG are 0.31 points lower and 0.99 points lower than VXUS’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 2017 was the strongest year for VXUS, returning 27.52% on an annual basis. The poorest year for VXUS in the last ten years was 2018, with a yield of -14.42%. Most years the Vanguard Total International Stock Index Fund ETF Shares has given investors modest returns, such as in 2010, 2016, and 2020, when gains were 0.0%, 4.72%, and 11.32% 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 VXUS, the end total would have been $14,187. This equates to a $4,187 profit over 7 years and a compound annual growth rate (CAGR) of 8.41%.
IEMG’s CAGR is 1.00 percentage points lower than that of VXUS and as a result, would have yielded $850 more on a $10,000 investment. Thus, IEMG performed worse than VXUS by 1.00% annually.
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