The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VIG and EMB? And which fund is better?
The expense ratio of VIG is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%). VIG also has a high exposure to the industrials sector while EMB is mostly comprised of BBB bonds. Overall, VIG has provided higher returns than EMB over the past ten years.
In this article, we’ll compare VIG vs. EMB. We’ll look at holdings and portfolio growth, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss VIG’s and EMB’s fund composition, annual returns, and performance and examine how these affect their overall returns.
|Name||Vanguard Dividend Appreciation Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Blend||Emerging Markets Bond|
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
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%.
VIG’s dividend yield is 2.29% lower than that of EMB (1.56% vs. 3.85%). Also, VIG yielded on average 6.91% more per year over the past decade (13.35% vs. 6.43%). The expense ratio of VIG is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%).
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|JPMorgan Chase & Co||3.8%|
|Johnson & Johnson||3.67%|
|Visa Inc Class A||3.22%|
|UnitedHealth Group Inc||3.22%|
|The Home Depot Inc||2.91%|
|Procter & Gamble Co||2.82%|
|Comcast Corp Class A||2.21%|
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
|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 Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a Beta of 0.86 with a Treynor Ratio of 14.33 and a Alpha of 0.12. Its Sharpe Ratio is 1.01 while VIG’s R-squared is 92.2. Furthermore, the fund has a Standard Deviation of 12.25 and a Mean Return of 1.09.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Alpha of 0.89 with a Beta of 1.36 and a R-squared of 23.34. Its Treynor Ratio is 3.24 while EMB’s Standard Deviation is 8.44. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Mean Return of 0.44.
VIG’s Mean Return is 0.65 points higher than that of EMB and its R-squared is 68.86 points higher. With a Standard Deviation of 12.25, VIG is slightly more volatile than EMB. The Alpha and Beta of VIG are 0.77 points lower and 0.50 points lower than EMB’s Alpha and Beta.
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VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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 VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 6.91 percentage points higher than that of EMB and as a result, would have yielded $18,656 more on a $10,000 investment. Thus, VIG outperformed EMB by 6.91% annually.
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