The iShares Core MSCI Emerging Markets ETF (IEMG) and the Communication Services Select Sector SPDR Fund (XLC) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and XLC is a SPDR State Street Global Advisors Communications fund. So, what’s the difference between IEMG and XLC? And which fund is better?
The expense ratio of IEMG is 0.01 percentage points lower than XLC’s (0.11% vs. 0.12%). IEMG also has a higher exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than XLC over the past ten years.
In this article, we’ll compare IEMG vs. XLC. We’ll look at portfolio growth and industry exposure, as well as at their performance and fund composition. Moreover, I’ll also discuss IEMG’s and XLC’s risk metrics, annual returns, and holdings and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Communication Services Select Sector SPDR Fund|
|Category||Diversified Emerging Mkts||Communications|
|Issuer||iShares||SPDR State Street Global Advisors|
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 Communication Services Select Sector SPDR Fund (XLC) is a Communications fund that is issued by SPDR State Street Global Advisors. It currently has 14.09B total assets under management and has yielded an average annual return of 29.04% over the past 10 years. The fund has a dividend yield of 0.62% with an expense ratio of 0.12%.
IEMG’s dividend yield is 1.16% higher than that of XLC (1.78% vs. 0.62%). Also, IEMG yielded on average 21.63% less per year over the past decade (7.41% vs. 29.04%). The expense ratio of IEMG is 0.01 percentage points lower than XLC’s (0.11% vs. 0.12%).
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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 Communication Services Select Sector SPDR Fund (XLC) has the most exposure to the Communication Services sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
XLC’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Energy, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IEMG is 20.44% more exposed to the Technology sector than XLC (20.44% vs 0.0%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 16.90% higher and 15.67% higher respectively (16.9% vs. 0.0% and 15.67% vs. 0.0%). In total, Real Estate, Energy, and Consumer Defensive also make up 13.14% more of the fund’s holdings compared to XLC (13.14% vs. 0.00%).
|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%.
|Facebook Inc A||23.75%|
|Alphabet Inc A||11.49%|
|Alphabet Inc Class C||11.16%|
|Charter Communications Inc A||4.65%|
|Comcast Corp Class A||4.44%|
|T-Mobile US Inc||4.41%|
|The Walt Disney Co||4.39%|
|Verizon Communications Inc||4.33%|
XLC’s Top Holdings are Facebook Inc A, Alphabet Inc A, Alphabet Inc Class C, Netflix Inc, and Charter Communications Inc A at 23.75%, 11.49%, 11.16%, 4.78%, and 4.65%.
Comcast Corp Class A (4.44%), T-Mobile US Inc (4.41%), and The Walt Disney Co (4.39%) have a slightly smaller but still significant weight. AT&T Inc and Verizon Communications Inc are also represented in the XLC’s holdings at 4.35% and 4.33%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a R-squared of 0 with a Beta of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Standard Deviation of 0.
The Communication Services Select Sector SPDR Fund (XLC) has a Alpha of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while XLC’s Treynor Ratio is 0. Furthermore, the fund has a Beta of 0 and a R-squared of 0.
IEMG’s Mean Return is 0.00 points lower than that of XLC and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than XLC. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than XLC’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 2019 was the strongest year for XLC, returning 31.22% on an annual basis. The poorest year for XLC in the last ten years was 2018, with a yield of 0.0%. Most years the Communication Services Select Sector SPDR Fund has given investors modest returns, such as in 2014, 2013, and 2012, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IEMG would have resulted in a final balance of $13,886. This is a profit of $3,886 over 2 years and amounts to a compound annual growth rate (CAGR) of 7.41%.
With a $10,000 investment in XLC, the end total would have been $16,645. This equates to a $6,645 profit over 2 years and a compound annual growth rate (CAGR) of 29.04%.
IEMG’s CAGR is 21.63 percentage points lower than that of XLC and as a result, would have yielded $2,759 less on a $10,000 investment. Thus, IEMG performed worse than XLC by 21.63% annually.
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