VOO vs. IEMG: What’s The Difference?

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

The expense ratio of VOO is 0.08 percentage points lower than IEMG’s (0.03% vs. 0.11%). VOO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VOO has provided higher returns than IEMG over the past ten years.

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

Summary

VOO IEMG
Name Vanguard S&P 500 ETF iShares Core MSCI Emerging Markets ETF
Category Large Blend Diversified Emerging Mkts
Issuer Vanguard iShares
AUM 753.41B 83.68B
Avg. Return 14.45% 7.41%
Div. Yield 1.34% 1.78%
Expense Ratio 0.03% 0.11%

The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.03%.

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%.

VOO’s dividend yield is 0.44% lower than that of IEMG (1.34% vs. 1.78%). Also, VOO yielded on average 7.04% more per year over the past decade (14.45% vs. 7.41%). The expense ratio of VOO is 0.08 percentage points lower than IEMG’s (0.03% vs. 0.11%).

Fund Composition

Industry Exposure

VOO vs. IEMG - Industry Exposure

VOO IEMG
Technology 24.24% 20.44%
Industrials 8.86% 5.92%
Energy 2.84% 4.71%
Communication Services 11.14% 11.41%
Utilities 2.43% 2.13%
Healthcare 13.1% 5.73%
Consumer Defensive 6.32% 5.68%
Real Estate 2.58% 2.75%
Financial Services 14.2% 16.9%
Consumer Cyclical 12.01% 15.67%
Basic Materials 2.27% 8.64%

The Vanguard S&P 500 ETF (VOO) has the most exposure to the Technology sector at 24.24%. This is followed by Financial Services and Healthcare at 14.2% and 13.1% respectively. Utilities (2.43%), Real Estate (2.58%), and Energy (2.84%) only make up 7.85% of the fund’s total assets.

VOO’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%, 12.01%, and 13.1%.

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%.

VOO is 3.80% more exposed to the Technology sector than IEMG (24.24% vs 20.44%). VOO’s exposure to Financial Services and Healthcare stocks is 2.70% lower and 7.37% higher respectively (14.2% vs. 16.9% and 13.1% vs. 5.73%). In total, Utilities, Real Estate, and Energy also make up 1.74% less of the fund’s holdings compared to IEMG (7.85% vs. 9.59%).

Holdings

VOO - Holdings

VOO Holdings Weight
Apple Inc 5.92%
Microsoft Corp 5.62%
Amazon.com Inc 4.06%
Facebook Inc Class A 2.29%
Alphabet Inc Class A 2.02%
Alphabet Inc Class C 1.97%
Tesla Inc 1.44%
Berkshire Hathaway Inc Class B 1.44%
NVIDIA Corp 1.37%
JPMorgan Chase & Co 1.3%

VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.

Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.

IEMG - Holdings

IEMG Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 5.37%
Tencent Holdings Ltd 4.42%
Alibaba Group Holding Ltd Ordinary Shares 4.38%
Samsung Electronics Co Ltd 3.49%
Meituan 1.52%
Naspers Ltd Class N 0.93%
Vale SA 0.91%
Reliance Industries Ltd Shs Dematerialised 0.83%
China Construction Bank Corp Class H 0.77%
Infosys Ltd 0.74%

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

VOO vs. IEMG - Annual Returns

Year VOO IEMG
2020 18.35% 18.18%
2019 31.46% 17.5%
2018 -4.42% -14.69%
2017 21.78% 36.78%
2016 11.93% 9.98%
2015 1.35% -13.86%
2014 13.63% -2.04%
2013 32.33% -2.16%
2012 15.98% 0.0%
2011 2.09% 0.0%
2010 0.0% 0.0%

VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% 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

VOO vs. IEMG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VOO $10,000 $23,343 14.45%
IEMG $10,000 $15,037 7.41%

A $10,000 investment in VOO would have resulted in a final balance of $23,343. This is a profit of $13,343 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.45%.

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%.

VOO’s CAGR is 7.04 percentage points higher than that of IEMG and as a result, would have yielded $8,306 more on a $10,000 investment. Thus, VOO outperformed IEMG by 7.04% annually.


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