The iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and VYM is a Vanguard Large Value fund. So, what’s the difference between IEMG and VYM? And which fund is better?
The expense ratio of IEMG is 0.05 percentage points higher than VYM’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 VYM over the past ten years.
In this article, we’ll compare IEMG vs. VYM. We’ll look at fund composition and portfolio growth, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss IEMG’s and VYM’s risk metrics, holdings, and performance and examine how these affect their overall returns.
Summary
| IEMG | VYM | |
| Name | iShares Core MSCI Emerging Markets ETF | Vanguard High Dividend Yield Index Fund ETF Shares |
| Category | Diversified Emerging Mkts | Large Value |
| Issuer | iShares | Vanguard |
| AUM | 83.68B | 48.5B |
| Avg. Return | 7.41% | 12.20% |
| Div. Yield | 1.78% | 2.79% |
| 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 High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.
IEMG’s dividend yield is 1.01% lower than that of VYM (1.78% vs. 2.79%). Also, IEMG yielded on average 4.79% less per year over the past decade (7.41% vs. 12.20%). The expense ratio of IEMG is 0.05 percentage points higher than VYM’s (0.11% vs. 0.06%).
Fund Composition
Industry Exposure
| IEMG | VYM | |
| Technology | 20.44% | 9.77% |
| Industrials | 5.92% | 10.14% |
| Energy | 4.71% | 7.12% |
| Communication Services | 11.41% | 5.91% |
| Utilities | 2.13% | 7.27% |
| Healthcare | 5.73% | 13.61% |
| Consumer Defensive | 5.68% | 14.13% |
| Real Estate | 2.75% | 0.02% |
| Financial Services | 16.9% | 22.05% |
| Consumer Cyclical | 15.67% | 5.57% |
| Basic Materials | 8.64% | 4.41% |
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 High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.
VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.
IEMG is 10.67% more exposed to the Technology sector than VYM (20.44% vs 9.77%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 5.15% lower and 10.10% higher respectively (16.9% vs. 22.05% and 15.67% vs. 5.57%). In total, Real Estate, Energy, and Consumer Defensive also make up 8.13% less of the fund’s holdings compared to VYM (13.14% vs. 21.27%).
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%.
| VYM Holdings | Weight |
| JPMorgan Chase & Co | 3.53% |
| Johnson & Johnson | 3.28% |
| The Home Depot Inc | 2.59% |
| Procter & Gamble Co | 2.48% |
| Bank of America Corp | 2.35% |
| Exxon Mobil Corp | 2.02% |
| Comcast Corp Class A | 1.96% |
| Verizon Communications Inc | 1.75% |
| Intel Corp | 1.71% |
| Cisco Systems Inc | 1.69% |
VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.
Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.
Risk Analysis
| IEMG | VYM | |
| Mean Return | 0 | 1.04 |
| R-squared | 0 | 88.88 |
| Std. Deviation | 0 | 12.69 |
| Alpha | 0 | -0.7 |
| Beta | 0 | 0.88 |
| Sharpe Ratio | 0 | 0.93 |
| Treynor Ratio | 0 | 13.24 |
The iShares Core MSCI Emerging Markets ETF (IEMG) has a Sharpe Ratio of 0 with a R-squared of 0 and a Standard Deviation of 0. Its Mean Return is 0 while IEMG’s Beta is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Alpha of 0.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Standard Deviation of 12.69 with a Mean Return of 1.04 and a R-squared of 88.88. Its Alpha is -0.7 while VYM’s Beta is 0.88. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Treynor Ratio of 13.24.
IEMG’s Mean Return is 1.04 points lower than that of VYM and its R-squared is 88.88 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than VYM. The Alpha and Beta of IEMG are 0.70 points higher and 0.88 points lower than VYM’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | VYM |
| 2020 | 18.18% | 1.14% |
| 2019 | 17.5% | 24.2% |
| 2018 | -14.69% | -5.87% |
| 2017 | 36.78% | 16.42% |
| 2016 | 9.98% | 16.87% |
| 2015 | -13.86% | 0.33% |
| 2014 | -2.04% | 13.47% |
| 2013 | -2.16% | 30.26% |
| 2012 | 0.0% | 12.68% |
| 2011 | 0.0% | 10.5% |
| 2010 | 0.0% | 14.17% |
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 VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $15,037 | 7.41% |
| VYM | $10,000 | $18,315 | 12.20% |
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 VYM, the end total would have been $18,315. This equates to a $8,315 profit over 7 years and a compound annual growth rate (CAGR) of 12.20%.
IEMG’s CAGR is 4.79 percentage points lower than that of VYM and as a result, would have yielded $3,278 less on a $10,000 investment. Thus, IEMG performed worse than VYM by 4.79% annually.
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