IWF vs. EMB: What’s The Difference?

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

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

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

Summary

IWF EMB
Name iShares Russell 1000 Growth ETF iShares J.P. Morgan USD Emerging Markets Bond ETF
Category Large Growth Emerging Markets Bond
Issuer iShares iShares
AUM 72.16B 19.76B
Avg. Return 17.72% 6.43%
Div. Yield 0.52% 3.85%
Expense Ratio 0.19% 0.39%

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 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%.

IWF’s dividend yield is 3.33% lower than that of EMB (0.52% vs. 3.85%). Also, IWF yielded on average 11.29% more per year over the past decade (17.72% vs. 6.43%). The expense ratio of IWF is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%).

Fund Composition

Holdings

IWF - Holdings

IWF Holdings Weight
Apple Inc 10.51%
Microsoft Corp 9.85%
Amazon.com Inc 6.63%
Facebook Inc Class A 3.91%
Alphabet Inc Class A 3.2%
Alphabet Inc Class C 3.03%
Tesla Inc 2.45%
NVIDIA Corp 2.14%
Visa Inc Class A 1.91%
The Home Depot Inc 1.62%

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%.

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.

Risk Analysis

IWF EMB
Mean Return 1.48 0.44
R-squared 92.93 23.34
Std. Deviation 14.42 8.44
Alpha 2.16 0.89
Beta 1.03 1.36
Sharpe Ratio 1.19 0.55
Treynor Ratio 17.1 3.24

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

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

IWF’s Mean Return is 1.04 points higher than that of EMB and its R-squared is 69.59 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than EMB. The Alpha and Beta of IWF are 1.27 points higher and 0.33 points lower than EMB’s Alpha and Beta.

Performance

Annual Returns

IWF vs. EMB - Annual Returns

Year IWF EMB
2020 38.21% 5.48%
2019 36.08% 15.57%
2018 -1.68% -5.67%
2017 29.96% 9.98%
2016 6.92% 9.41%
2015 5.48% 0.43%
2014 12.84% 6.69%
2013 33.19% -7.42%
2012 15.03% 17.64%
2011 2.47% 7.2%
2010 16.47% 11.47%

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 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

IWF vs. EMB - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWF $10,000 $55,920 17.72%
EMB $10,000 $19,295 6.43%

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 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%.

IWF’s CAGR is 11.29 percentage points higher than that of EMB and as a result, would have yielded $36,625 more on a $10,000 investment. Thus, IWF outperformed EMB by 11.29% annually.


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