The iShares Core S&P Small-Cap ETF (IJR) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IJR and EMB? And which fund is better?
The expense ratio of IJR is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%). IJR also has a high exposure to the industrials sector while EMB is mostly comprised of BBB bonds. Overall, IJR has provided higher returns than EMB over the past ten years.
In this article, we’ll compare IJR vs. EMB. We’ll look at holdings and industry exposure, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss IJR’s and EMB’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Small Blend||Emerging Markets Bond|
The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
IJR’s dividend yield is 2.89% lower than that of EMB (0.96% vs. 3.85%). Also, IJR yielded on average 7.53% more per year over the past decade (13.97% vs. 6.43%). The expense ratio of IJR is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%).
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|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
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The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Mean Return of 1.21 and a Standard Deviation of 18.68. Its R-squared is 76.03 while IJR’s Alpha is -3.7. Furthermore, the fund has a Treynor Ratio of 10.77 and a Beta of 1.2.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Mean Return of 0.44 with a Treynor Ratio of 3.24 and a Sharpe Ratio of 0.55. Its R-squared is 23.34 while EMB’s Alpha is 0.89. Furthermore, the fund has a Beta of 1.36 and a Standard Deviation of 8.44.
IJR’s Mean Return is 0.77 points higher than that of EMB and its R-squared is 52.69 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than EMB. The Alpha and Beta of IJR are 4.59 points lower and 0.16 points lower than EMB’s Alpha and Beta.
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IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.
The year 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.
With a $10,000 investment in EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
IJR’s CAGR is 7.53 percentage points higher than that of EMB and as a result, would have yielded $19,505 more on a $10,000 investment. Thus, IJR outperformed EMB by 7.53% annually.
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