IVW vs. EEM: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the iShares MSCI Emerging Markets ETF (EEM) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and EEM is a iShares Diversified Emerging Mkts fund. So, what’s the difference between IVW and EEM? And which fund is better?

The expense ratio of IVW is 0.50 percentage points lower than EEM’s (0.18% vs. 0.68%). IVW also has a higher exposure to the technology sector and a lower standard deviation. Overall, IVW has provided higher returns than EEM over the past ten years.

In this article, we’ll compare IVW vs. EEM. We’ll look at performance and fund composition, as well as at their annual returns and holdings. Moreover, I’ll also discuss IVW’s and EEM’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.

Summary

IVW EEM
Name iShares S&P 500 Growth ETF iShares MSCI Emerging Markets ETF
Category Large Growth Diversified Emerging Mkts
Issuer iShares iShares
AUM 35.72B 30.33B
Avg. Return 16.74% 5.47%
Div. Yield 0.61% 1.48%
Expense Ratio 0.18% 0.68%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

The iShares MSCI Emerging Markets ETF (EEM) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 30.33B total assets under management and has yielded an average annual return of 5.47% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.68%.

IVW’s dividend yield is 0.87% lower than that of EEM (0.61% vs. 1.48%). Also, IVW yielded on average 11.26% more per year over the past decade (16.74% vs. 5.47%). The expense ratio of IVW is 0.50 percentage points lower than EEM’s (0.18% vs. 0.68%).

Fund Composition

Industry Exposure

IVW vs. EEM - Industry Exposure

IVW EEM
Technology 37.8% 21.36%
Industrials 5.72% 4.61%
Energy 0.06% 5.17%
Communication Services 15.44% 11.76%
Utilities 0.47% 1.99%
Healthcare 11.88% 5.06%
Consumer Defensive 3.84% 5.45%
Real Estate 1.11% 1.98%
Financial Services 6.78% 18.39%
Consumer Cyclical 15.25% 15.16%
Basic Materials 1.65% 9.07%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

The iShares MSCI Emerging Markets ETF (EEM) has the most exposure to the Technology sector at 21.36%. This is followed by Financial Services and Consumer Cyclical at 18.39% and 15.16% respectively. Utilities (1.99%), Industrials (4.61%), and Healthcare (5.06%) only make up 11.66% of the fund’s total assets.

EEM’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.17%, 5.45%, 9.07%, 11.76%, and 15.16%.

IVW is 16.44% more exposed to the Technology sector than EEM (37.8% vs 21.36%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 3.68% higher and 0.09% higher respectively (15.44% vs. 11.76% and 15.25% vs. 15.16%). In total, Utilities, Real Estate, and Basic Materials also make up 9.81% less of the fund’s holdings compared to EEM (3.23% vs. 13.04%).

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

EEM - Holdings

EEM Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 6.36%
Alibaba Group Holding Ltd Ordinary Shares 4.58%
Tencent Holdings Ltd 4.41%
Samsung Electronics Co Ltd 4.05%
Meituan 1.24%
Vale SA 1.04%
Naspers Ltd Class N 1.04%
Reliance Industries Ltd Shs Dematerialised 0.97%
Infosys Ltd 0.92%
China Construction Bank Corp Class H 0.83%

EEM’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Alibaba Group Holding Ltd Ordinary Shares, Tencent Holdings Ltd, Samsung Electronics Co Ltd, and Meituan at 6.36%, 4.58%, 4.41%, 4.05%, and 1.24%.

Vale SA (1.04%), Naspers Ltd Class N (1.04%), and Reliance Industries Ltd Shs Dematerialised (0.97%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the EEM’s holdings at 0.92% and 0.83%.

Risk Analysis

IVW EEM
Mean Return 1.44 0.38
R-squared 93.82 83.5
Std. Deviation 13.77 17.79
Alpha 2.19 -2.33
Beta 0.98 1.08
Sharpe Ratio 1.21 0.22
Treynor Ratio 17.24 2.22

The iShares S&P 500 Growth ETF (IVW) has a R-squared of 93.82 with a Alpha of 2.19 and a Standard Deviation of 13.77. Its Mean Return is 1.44 while IVW’s Beta is 0.98. Furthermore, the fund has a Treynor Ratio of 17.24 and a Sharpe Ratio of 1.21.

The iShares MSCI Emerging Markets ETF (EEM) has a Treynor Ratio of 2.22 with a Sharpe Ratio of 0.22 and a Standard Deviation of 17.79. Its Mean Return is 0.38 while EEM’s R-squared is 83.5. Furthermore, the fund has a Alpha of -2.33 and a Beta of 1.08.

IVW’s Mean Return is 1.06 points higher than that of EEM and its R-squared is 10.32 points higher. With a Standard Deviation of 13.77, IVW is slightly less volatile than EEM. The Alpha and Beta of IVW are 4.52 points higher and 0.10 points lower than EEM’s Alpha and Beta.

Performance

Annual Returns

IVW vs. EEM - Annual Returns

Year IVW EEM
2020 33.21% 17.56%
2019 30.91% 17.67%
2018 -0.17% -14.98%
2017 27.2% 36.42%
2016 6.74% 10.51%
2015 5.33% -15.41%
2014 14.67% -2.82%
2013 32.48% -3.14%
2012 14.39% 17.32%
2011 4.49% -18.87%
2010 14.84% 15.93%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% respectively.

The year 2017 was the strongest year for EEM, returning 36.42% on an annual basis. The poorest year for EEM in the last ten years was 2011, with a yield of -18.87%. Most years the iShares MSCI Emerging Markets ETF has given investors modest returns, such as in 2014, 2016, and 2010, when gains were -2.82%, 10.51%, and 15.93% respectively.

Portfolio Growth

IVW vs. EEM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $51,915 16.74%
EEM $10,000 $15,578 5.47%

A $10,000 investment in IVW would have resulted in a final balance of $51,915. This is a profit of $41,915 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

With a $10,000 investment in EEM, the end total would have been $15,578. This equates to a $5,578 profit over 11 years and a compound annual growth rate (CAGR) of 5.47%.

IVW’s CAGR is 11.26 percentage points higher than that of EEM and as a result, would have yielded $36,337 more on a $10,000 investment. Thus, IVW outperformed EEM by 11.26% annually.


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