The iShares Core MSCI Emerging Markets ETF (IEMG) and the Health Care Select Sector SPDR Fund (XLV) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and XLV is a SPDR State Street Global Advisors Health fund. So, what’s the difference between IEMG and XLV? And which fund is better?
The expense ratio of IEMG is 0.01 percentage points lower than XLV’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 XLV over the past ten years.
In this article, we’ll compare IEMG vs. XLV. We’ll look at risk metrics and annual returns, as well as at their performance and industry exposure. Moreover, I’ll also discuss IEMG’s and XLV’s fund composition, holdings, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core MSCI Emerging Markets ETF||Health Care Select Sector SPDR Fund|
|Category||Diversified Emerging Mkts||Health|
|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 Health Care Select Sector SPDR Fund (XLV) is a Health fund that is issued by SPDR State Street Global Advisors. It currently has 27.88B total assets under management and has yielded an average annual return of 15.02% over the past 10 years. The fund has a dividend yield of 1.4% with an expense ratio of 0.12%.
IEMG’s dividend yield is 0.38% higher than that of XLV (1.78% vs. 1.4%). Also, IEMG yielded on average 7.62% less per year over the past decade (7.41% vs. 15.02%). The expense ratio of IEMG is 0.01 percentage points lower than XLV’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 Health Care Select Sector SPDR Fund (XLV) has the most exposure to the Healthcare 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.
XLV’s mid-section with moderate exposure is comprised of Consumer Defensive, Utilities, Communication Services, 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 XLV (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 XLV (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%.
|Johnson & Johnson||9.19%|
|UnitedHealth Group Inc||8.01%|
|Thermo Fisher Scientific Inc||4.2%|
|Merck & Co Inc||4.17%|
|Eli Lilly and Co||3.87%|
XLV’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and AbbVie Inc at 9.19%, 8.01%, 4.64%, 4.36%, and 4.21%.
Thermo Fisher Scientific Inc (4.2%), Merck & Co Inc (4.17%), and Eli Lilly and Co (3.87%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the XLV’s holdings at 3.61% and 3.54%.
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The iShares Core MSCI Emerging Markets ETF (IEMG) has a Beta of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while IEMG’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.
The Health Care Select Sector SPDR Fund (XLV) has a Mean Return of 1.27 with a Beta of 0.7 and a Alpha of 7.75. Its Sharpe Ratio is 1.13 while XLV’s Treynor Ratio is 21.1. Furthermore, the fund has a Standard Deviation of 12.94 and a R-squared of 58.19.
IEMG’s Mean Return is 1.27 points lower than that of XLV and its R-squared is 58.19 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than XLV. The Alpha and Beta of IEMG are 7.75 points lower and 0.70 points lower than XLV’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 2013 was the strongest year for XLV, returning 41.24% on an annual basis. The poorest year for XLV in the last ten years was 2016, with a yield of -2.83%. Most years the Health Care Select Sector SPDR Fund has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 12.44%, 13.33%, and 17.56% 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 XLV, the end total would have been $22,977. This equates to a $12,977 profit over 7 years and a compound annual growth rate (CAGR) of 15.02%.
IEMG’s CAGR is 7.62 percentage points lower than that of XLV and as a result, would have yielded $7,940 less on a $10,000 investment. Thus, IEMG performed worse than XLV by 7.62% annually.
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