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IWF vs. EEM: What’s The Difference?

The iShares Russell 1000 Growth ETF (IWF) and the iShares MSCI Emerging Markets ETF (EEM) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and EEM is a iShares Diversified Emerging Mkts fund. So, what’s the difference between IWF and EEM? And which fund is better?

The expense ratio of IWF is 0.49 percentage points lower than EEM’s (0.19% vs. 0.68%). IWF also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWF has provided higher returns than EEM over the past ten years.

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

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Summary

IWFEEM
NameiShares Russell 1000 Growth ETFiShares MSCI Emerging Markets ETF
CategoryLarge GrowthDiversified Emerging Mkts
IssueriSharesiShares
AUM72.16B30.33B
Avg. Return17.72%5.47%
Div. Yield0.52%1.48%
Expense Ratio0.19%0.68%

The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.

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%.

IWF’s dividend yield is 0.96% lower than that of EEM (0.52% vs. 1.48%). Also, IWF yielded on average 12.25% more per year over the past decade (17.72% vs. 5.47%). The expense ratio of IWF is 0.49 percentage points lower than EEM’s (0.19% vs. 0.68%).

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Fund Composition

Industry Exposure

IWF vs. EEM - Industry Exposure

IWFEEM
Technology39.29%21.36%
Industrials6.19%4.61%
Energy0.28%5.17%
Communication Services12.82%11.76%
Utilities0.03%1.99%
Healthcare9.23%5.06%
Consumer Defensive4.31%5.45%
Real Estate1.85%1.98%
Financial Services7.36%18.39%
Consumer Cyclical17.62%15.16%
Basic Materials1.01%9.07%

The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.

IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.

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%.

IWF is 17.93% more exposed to the Technology sector than EEM (39.29% vs 21.36%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 2.46% higher and 1.06% higher respectively (17.62% vs. 15.16% and 12.82% vs. 11.76%). In total, Energy, Basic Materials, and Real Estate also make up 13.08% less of the fund’s holdings compared to EEM (3.14% vs. 16.22%).

Holdings

IWF - Holdings

IWF HoldingsWeight
Apple Inc10.51%
Microsoft Corp9.85%
Amazon.com Inc6.63%
Facebook Inc Class A3.91%
Alphabet Inc Class A3.2%
Alphabet Inc Class C3.03%
Tesla Inc2.45%
NVIDIA Corp2.14%
Visa Inc Class A1.91%
The Home Depot Inc1.62%

IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.

Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.

EEM - Holdings

EEM HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd6.36%
Alibaba Group Holding Ltd Ordinary Shares4.58%
Tencent Holdings Ltd4.41%
Samsung Electronics Co Ltd4.05%
Meituan1.24%
Vale SA1.04%
Naspers Ltd Class N1.04%
Reliance Industries Ltd Shs Dematerialised0.97%
Infosys Ltd0.92%
China Construction Bank Corp Class H0.83%

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%.

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Risk Analysis

IWFEEM
Mean Return1.480.38
R-squared92.9383.5
Std. Deviation14.4217.79
Alpha2.16-2.33
Beta1.031.08
Sharpe Ratio1.190.22
Treynor Ratio17.12.22

The iShares Russell 1000 Growth ETF (IWF) has a Sharpe Ratio of 1.19 with a Treynor Ratio of 17.1 and a R-squared of 92.93. Its Mean Return is 1.48 while IWF’s Standard Deviation is 14.42. Furthermore, the fund has a Alpha of 2.16 and a Beta of 1.03.

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

IWF’s Mean Return is 1.10 points higher than that of EEM and its R-squared is 9.43 points higher. With a Standard Deviation of 14.42, IWF is slightly less volatile than EEM. The Alpha and Beta of IWF are 4.49 points higher and 0.05 points lower than EEM’s Alpha and Beta.

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Performance

Annual Returns

IWF vs. EEM - Annual Returns

YearIWFEEM
202038.21%17.56%
201936.08%17.67%
2018-1.68%-14.98%
201729.96%36.42%
20166.92%10.51%
20155.48%-15.41%
201412.84%-2.82%
201333.19%-3.14%
201215.03%17.32%
20112.47%-18.87%
201016.47%15.93%

IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% 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

IWF vs. EEM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IWF$10,000$55,92017.72%
EEM$10,000$15,5785.47%

A $10,000 investment in IWF would have resulted in a final balance of $55,920. This is a profit of $45,920 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.72%.

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%.

IWF’s CAGR is 12.25 percentage points higher than that of EEM and as a result, would have yielded $40,342 more on a $10,000 investment. Thus, IWF outperformed EEM by 12.25% annually.


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