The iShares Russell 2000 ETF (IWM) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IWM and EMB? And which fund is better?
The expense ratio of IWM is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%). IWM also has a high exposure to the healthcare sector while EMB is mostly comprised of BBB bonds. Overall, IWM has provided higher returns than EMB over the past ten years.
In this article, we’ll compare IWM vs. EMB. We’ll look at fund composition and industry exposure, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss IWM’s and EMB’s risk metrics, holdings, and performance and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Small Blend||Emerging Markets Bond|
The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% 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%.
IWM’s dividend yield is 2.99% lower than that of EMB (0.86% vs. 3.85%). Also, IWM yielded on average 7.09% more per year over the past decade (13.52% vs. 6.43%). The expense ratio of IWM is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%).
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|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.
Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.
|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 Russell 2000 ETF (IWM) has a Alpha of -5.12 with a Sharpe Ratio of 0.68 and a Treynor Ratio of 9.56. Its R-squared is 77.73 while IWM’s Mean Return is 1.12. Furthermore, the fund has a Beta of 1.23 and a Standard Deviation of 18.87.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Beta of 1.36 with a Sharpe Ratio of 0.55 and a Alpha of 0.89. Its Mean Return is 0.44 while EMB’s Treynor Ratio is 3.24. Furthermore, the fund has a Standard Deviation of 8.44 and a R-squared of 23.34.
IWM’s Mean Return is 0.68 points higher than that of EMB and its R-squared is 54.39 points higher. With a Standard Deviation of 18.87, IWM is slightly more volatile than EMB. The Alpha and Beta of IWM are 6.01 points lower and 0.13 points lower than EMB’s Alpha and Beta.
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IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% 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 IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
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%.
IWM’s CAGR is 7.09 percentage points higher than that of EMB and as a result, would have yielded $17,391 more on a $10,000 investment. Thus, IWM outperformed EMB by 7.09% annually.
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