The SPDR S&P 500 ETF Trust (SPY) and the iShares Core MSCI Emerging Markets ETF (IEMG) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and IEMG is a iShares Diversified Emerging Mkts fund. So, what’s the difference between SPY and IEMG? And which fund is better?

The expense ratio of SPY is 0.02 percentage points lower than IEMG’s (0.09% vs. 0.11%). SPY also has a higher exposure to the technology sector and a higher standard deviation. Overall, SPY has provided higher returns than IEMG over the past ten years.

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

Summary

SPYIEMG
NameSPDR S&P 500 ETF TrustiShares Core MSCI Emerging Markets ETF
CategoryLarge BlendDiversified Emerging Mkts
IssuerSPDR State Street Global AdvisorsiShares
AUM374.03B83.68B
Avg. Return14.41%7.41%
Div. Yield1.3%1.78%
Expense Ratio0.09%0.11%

The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.

The iShares Core MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.

SPY’s dividend yield is 0.48% lower than that of IEMG (1.3% vs. 1.78%). Also, SPY yielded on average 7.00% more per year over the past decade (14.41% vs. 7.41%). The expense ratio of SPY is 0.02 percentage points lower than IEMG’s (0.09% vs. 0.11%).

Fund Composition

Industry Exposure

SPY vs. IEMG - Industry Exposure

SPYIEMG
Technology24.22%20.44%
Industrials8.86%5.92%
Energy2.86%4.71%
Communication Services11.14%11.41%
Utilities2.45%2.13%
Healthcare13.09%5.73%
Consumer Defensive6.32%5.68%
Real Estate2.57%2.75%
Financial Services14.23%16.9%
Consumer Cyclical12.0%15.67%
Basic Materials2.27%8.64%

The SPDR S&P 500 ETF Trust (SPY) has the most exposure to the Technology sector at 24.22%. This is followed by Financial Services and Healthcare at 14.23% and 13.09% respectively. Utilities (2.45%), Real Estate (2.57%), and Energy (2.86%) only make up 7.88% of the fund’s total assets.

SPY’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.0%, and 13.09%.

The iShares Core MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.

IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.

SPY is 3.78% more exposed to the Technology sector than IEMG (24.22% vs 20.44%). SPY’s exposure to Financial Services and Healthcare stocks is 2.67% lower and 7.36% higher respectively (14.23% vs. 16.9% and 13.09% vs. 5.73%). In total, Utilities, Real Estate, and Energy also make up 1.71% less of the fund’s holdings compared to IEMG (7.88% vs. 9.59%).

Holdings

SPY - Holdings

SPY HoldingsWeight
Apple Inc5.9%
Microsoft Corp5.6%
Amazon.com Inc4.05%
Facebook Inc A2.29%
Alphabet Inc A2.02%
Alphabet Inc Class C1.96%
Berkshire Hathaway Inc Class B1.45%
Tesla Inc1.44%
NVIDIA Corp1.37%
JPMorgan Chase & Co1.29%

SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.

IEMG - Holdings

IEMG HoldingsWeight
Taiwan Semiconductor Manufacturing Co Ltd5.37%
Tencent Holdings Ltd4.42%
Alibaba Group Holding Ltd Ordinary Shares4.38%
Samsung Electronics Co Ltd3.49%
Meituan1.52%
Naspers Ltd Class N0.93%
Vale SA0.91%
Reliance Industries Ltd Shs Dematerialised0.83%
China Construction Bank Corp Class H0.77%
Infosys Ltd0.74%

IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.

Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.

Performance

Annual Returns

SPY vs. IEMG - Annual Returns

YearSPYIEMG
202018.25%18.18%
201931.29%17.5%
2018-4.45%-14.69%
201721.69%36.78%
201611.8%9.98%
20151.34%-13.86%
201413.53%-2.04%
201332.21%-2.16%
201215.84%0.0%
20112.06%0.0%
201014.93%0.0%

SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, and 15.84% respectively.

The year 2017 was the strongest year for IEMG, returning 36.78% on an annual basis. The poorest year for IEMG in the last ten years was 2018, with a yield of -14.69%. Most years the iShares Core MSCI Emerging Markets ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

SPY vs. IEMG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SPY$10,000$23,21914.41%
IEMG$10,000$15,0377.41%

A $10,000 investment in SPY would have resulted in a final balance of $23,219. This is a profit of $13,219 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.41%.

With a $10,000 investment in IEMG, the end total would have been $15,037. This equates to a $5,037 profit over 7 years and a compound annual growth rate (CAGR) of 7.41%.

SPY’s CAGR is 7.00 percentage points higher than that of IEMG and as a result, would have yielded $8,182 more on a $10,000 investment. Thus, SPY outperformed IEMG by 7.00% annually.

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