The iShares Core MSCI Total International Stock ETF (IXUS) and the iShares MSCI Emerging Markets ETF (EEM) are both among the Top 100 ETFs. IXUS is a iShares Foreign Large Blend fund and EEM is a iShares Diversified Emerging Mkts fund. So, what’s the difference between IXUS and EEM? And which fund is better?
The expense ratio of IXUS is 0.59 percentage points lower than EEM’s (0.09% vs. 0.68%). IXUS also has a lower exposure to the financial services sector and a lower standard deviation. Overall, IXUS has provided higher returns than EEM over the past ten years.
In this article, we’ll compare IXUS vs. EEM. We’ll look at annual returns and industry exposure, as well as at their performance and risk metrics. Moreover, I’ll also discuss IXUS’s and EEM’s portfolio growth, holdings, and fund composition and examine how these affect their overall returns.
|Name||iShares Core MSCI Total International Stock ETF||iShares MSCI Emerging Markets ETF|
|Category||Foreign Large Blend||Diversified Emerging Mkts|
The iShares Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.
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%.
IXUS’s dividend yield is 0.65% higher than that of EEM (2.13% vs. 1.48%). Also, IXUS yielded on average 0.61% more per year over the past decade (6.09% vs. 5.47%). The expense ratio of IXUS is 0.59 percentage points lower than EEM’s (0.09% vs. 0.68%).
The iShares Core MSCI Total International Stock ETF (IXUS) has the most exposure to the Financial Services sector at 17.34%. This is followed by Technology and Industrials at 13.24% and 12.78% respectively. Real Estate (3.66%), Energy (4.39%), and Communication Services (7.09%) only make up 15.14% of the fund’s total assets.
IXUS’s mid-section with moderate exposure is comprised of Consumer Defensive, Basic Materials, Healthcare, Consumer Cyclical, and Industrials stocks at 8.19%, 8.5%, 9.29%, 12.57%, and 12.78%.
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%.
IXUS is 1.05% less exposed to the Financial Services sector than EEM (17.34% vs 18.39%). IXUS’s exposure to Technology and Industrials stocks is 8.12% lower and 8.17% higher respectively (13.24% vs. 21.36% and 12.78% vs. 4.61%). In total, Real Estate, Energy, and Communication Services also make up 3.77% less of the fund’s holdings compared to EEM (15.14% vs. 18.91%).
|Taiwan Semiconductor Manufacturing Co Ltd||1.64%|
|Tencent Holdings Ltd||1.35%|
|Alibaba Group Holding Ltd Ordinary Shares||1.34%|
|Samsung Electronics Co Ltd||1.06%|
|ASML Holding NV||0.9%|
|Roche Holding AG||0.81%|
|LVMH Moet Hennessy Louis Vuitton SE||0.67%|
|Toyota Motor Corp||0.59%|
IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.
ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.
|Taiwan Semiconductor Manufacturing Co Ltd||6.36%|
|Alibaba Group Holding Ltd Ordinary Shares||4.58%|
|Tencent Holdings Ltd||4.41%|
|Samsung Electronics Co Ltd||4.05%|
|Naspers Ltd Class N||1.04%|
|Reliance Industries Ltd Shs Dematerialised||0.97%|
|China Construction Bank Corp Class H||0.83%|
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%.
The iShares Core MSCI Total International Stock ETF (IXUS) has a Sharpe Ratio of 0 with a R-squared of 0 and a Mean Return of 0. Its Beta is 0 while IXUS’s Standard Deviation is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.
The iShares MSCI Emerging Markets ETF (EEM) has a Standard Deviation of 17.79 with a Mean Return of 0.38 and a Sharpe Ratio of 0.22. Its Beta is 1.08 while EEM’s R-squared is 83.5. Furthermore, the fund has a Treynor Ratio of 2.22 and a Alpha of -2.33.
IXUS’s Mean Return is 0.38 points lower than that of EEM and its R-squared is 83.50 points lower. With a Standard Deviation of 0, IXUS is slightly less volatile than EEM. The Alpha and Beta of IXUS are 2.33 points higher and 1.08 points lower than EEM’s Alpha and Beta.
IXUS had its best year in 2017 with an annual return of 28.08%. IXUS’s worst year over the past decade yielded -14.55% and occurred in 2018. In most years the iShares Core MSCI Total International Stock ETF provided moderate returns such as in 2011, 2010, and 2016 where annual returns amounted to 0.0%, 0.0%, and 4.66% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IXUS would have resulted in a final balance of $14,209. This is a profit of $4,209 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.09%.
With a $10,000 investment in EEM, the end total would have been $14,575. This equates to a $4,575 profit over 7 years and a compound annual growth rate (CAGR) of 5.47%.
IXUS’s CAGR is 0.61 percentage points higher than that of EEM and as a result, would have yielded $366 less on a $10,000 investment. Thus, IXUS outperformed EEM by 0.61% annually.
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