The iShares Russell Mid-Cap ETF (IWR) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between IWR and EMB? And which fund is better?
The expense ratio of IWR is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%). IWR also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, IWR has provided higher returns than EMB over the past ten years.
In this article, we’ll compare IWR vs. EMB. We’ll look at holdings and industry exposure, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss IWR’s and EMB’s performance, risk metrics, and annual returns and examine how these affect their overall returns.
Summary
| IWR | EMB | |
| Name | iShares Russell Mid-Cap ETF | iShares J.P. Morgan USD Emerging Markets Bond ETF |
| Category | Mid-Cap Blend | Emerging Markets Bond |
| Issuer | iShares | iShares |
| AUM | 29.84B | 19.76B |
| Avg. Return | 14.15% | 6.43% |
| Div. Yield | 0.99% | 3.85% |
| Expense Ratio | 0.19% | 0.39% |
The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% 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%.
IWR’s dividend yield is 2.86% lower than that of EMB (0.99% vs. 3.85%). Also, IWR yielded on average 7.72% more per year over the past decade (14.15% vs. 6.43%). The expense ratio of IWR is 0.20 percentage points lower than EMB’s (0.19% vs. 0.39%).
Fund Composition
Holdings
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
| 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
| IWR | EMB | |
| Mean Return | 1.17 | 0.44 |
| R-squared | 91.52 | 23.34 |
| Std. Deviation | 15.66 | 8.44 |
| Alpha | -2.8 | 0.89 |
| Beta | 1.11 | 1.36 |
| Sharpe Ratio | 0.86 | 0.55 |
| Treynor Ratio | 11.72 | 3.24 |
The iShares Russell Mid-Cap ETF (IWR) has a R-squared of 91.52 with a Alpha of -2.8 and a Treynor Ratio of 11.72. Its Beta is 1.11 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a Mean Return of 1.17 and a Standard Deviation of 15.66.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Treynor Ratio of 3.24 with a Mean Return of 0.44 and a R-squared of 23.34. Its Alpha is 0.89 while EMB’s Beta is 1.36. Furthermore, the fund has a Standard Deviation of 8.44 and a Sharpe Ratio of 0.55.
IWR’s Mean Return is 0.73 points higher than that of EMB and its R-squared is 68.18 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than EMB. The Alpha and Beta of IWR are 3.69 points lower and 0.25 points lower than EMB’s Alpha and Beta.
Performance
Annual Returns
| Year | IWR | EMB |
| 2020 | 16.91% | 5.48% |
| 2019 | 30.31% | 15.57% |
| 2018 | -9.13% | -5.67% |
| 2017 | 18.32% | 9.98% |
| 2016 | 13.58% | 9.41% |
| 2015 | -2.57% | 0.43% |
| 2014 | 13.03% | 6.69% |
| 2013 | 34.5% | -7.42% |
| 2012 | 17.13% | 17.64% |
| 2011 | -1.67% | 7.2% |
| 2010 | 25.25% | 11.47% |
IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWR | $10,000 | $39,751 | 14.15% |
| EMB | $10,000 | $19,295 | 6.43% |
A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.
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%.
IWR’s CAGR is 7.72 percentage points higher than that of EMB and as a result, would have yielded $20,456 more on a $10,000 investment. Thus, IWR outperformed EMB by 7.72% annually.
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