IWD vs. EMB: What’s The Difference?

The iShares Russell 1000 Value ETF (IWD) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IWD and EMB? And which fund is better?

The expense ratio of IWD is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%). IWD also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, IWD has provided higher returns than EMB over the past ten years.

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

Summary

IWD EMB
Name iShares Russell 1000 Value ETF iShares J.P. Morgan USD Emerging Markets Bond ETF
Category Large Value Emerging Markets Bond
Issuer iShares iShares
AUM 54.1B 19.76B
Avg. Return 11.40% 6.43%
Div. Yield 1.57% 3.85%
Expense Ratio 0.19% 0.39%

The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

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%.

IWD’s dividend yield is 2.28% lower than that of EMB (1.57% vs. 3.85%). Also, IWD yielded on average 4.97% more per year over the past decade (11.40% vs. 6.43%). The expense ratio of IWD is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%).

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Fund Composition

Holdings

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

EMB - Holdings

EMB Bond Sectors Weight
BBB 33.79%
B 21.97%
BB 16.92%
A 13.67%
AA 7.97%
Below B 4.49%
Others 1.11%
AAA 0.09%
US Government 0.0%

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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Risk Analysis

IWD EMB
Mean Return 1.03 0.44
R-squared 92.38 23.34
Std. Deviation 14.35 8.44
Alpha -3.23 0.89
Beta 1.02 1.36
Sharpe Ratio 0.81 0.55
Treynor Ratio 11.06 3.24

The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Sharpe Ratio of 0.81 and a Alpha of -3.23. Its Mean Return is 1.03 while IWD’s Treynor Ratio is 11.06. Furthermore, the fund has a Beta of 1.02 and a R-squared of 92.38.

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a R-squared of 23.34 with a Standard Deviation of 8.44 and a Mean Return of 0.44. Its Sharpe Ratio is 0.55 while EMB’s Treynor Ratio is 3.24. Furthermore, the fund has a Alpha of 0.89 and a Beta of 1.36.

IWD’s Mean Return is 0.59 points higher than that of EMB and its R-squared is 69.04 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than EMB. The Alpha and Beta of IWD are 4.12 points lower and 0.34 points lower than EMB’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. EMB - Annual Returns

Year IWD EMB
2020 2.67% 5.48%
2019 26.34% 15.57%
2018 -8.4% -5.67%
2017 13.47% 9.98%
2016 17.09% 9.41%
2015 -3.95% 0.43%
2014 13.21% 6.69%
2013 32.18% -7.42%
2012 17.28% 17.64%
2011 0.21% 7.2%
2010 15.3% 11.47%

IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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.

Portfolio Growth

IWD vs. EMB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $30,746 11.40%
EMB $10,000 $19,295 6.43%

A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

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%.

IWD’s CAGR is 4.97 percentage points higher than that of EMB and as a result, would have yielded $11,451 more on a $10,000 investment. Thus, IWD outperformed EMB by 4.97% annually.


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