The Vanguard Total World Stock Index Fund ETF Shares (VT) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VT and EMB? And which fund is better?

The expense ratio of VT is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%). VT also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, VT has provided higher returns than EMB over the past 11 years.

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

Summary

VTEMB
NameVanguard Total World Stock Index Fund ETF SharesiShares J.P. Morgan USD Emerging Markets Bond ETF
CategoryN/AEmerging Markets Bond
IssuerVanguardiShares
AUM30.44B19.76B
Avg. Return10.42%6.43%
Div. Yield1.65%3.85%
Expense Ratio0.08%0.39%

The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

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%.

VT’s dividend yield is 2.20% lower than that of EMB (1.65% vs. 3.85%). Also, VT yielded on average 3.98% more per year over the past decade (10.42% vs. 6.43%). The expense ratio of VT is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%).

Fund Composition

Holdings

VT - Holdings

VT HoldingsWeight
Apple Inc2.85%
Microsoft Corp2.71%
Amazon.com Inc1.98%
Facebook Inc Class A1.1%
Alphabet Inc Class A0.97%
Alphabet Inc Class C0.95%
Tesla Inc0.7%
NVIDIA Corp0.64%
JPMorgan Chase & Co0.62%
Tencent Holdings Ltd0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

EMB - Holdings

EMB Bond SectorsWeight
BBB33.79%
B21.97%
BB16.92%
A13.67%
AA7.97%
Below B4.49%
Others1.11%
AAA0.09%
US Government0.0%

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

VTEMB
Mean Return0.90.44
R-squared99.3523.34
Std. Deviation14.198.44
Alpha0.20.89
Beta1.011.36
Sharpe Ratio0.710.55
Treynor Ratio9.53.24

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Mean Return of 0.9 and a R-squared of 99.35. Its Sharpe Ratio is 0.71 while VT’s Treynor Ratio is 9.5. Furthermore, the fund has a Alpha of 0.2 and a Standard Deviation of 14.19.

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a R-squared of 23.34 with a Beta of 1.36 and a Alpha of 0.89. Its Sharpe Ratio is 0.55 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Treynor Ratio of 3.24 and a Standard Deviation of 8.44.

VT’s Mean Return is 0.46 points higher than that of EMB and its R-squared is 76.01 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than EMB. The Alpha and Beta of VT are 0.69 points lower and 0.35 points lower than EMB’s Alpha and Beta.

Performance

Annual Returns

VT vs. EMB - Annual Returns

YearVTEMB
202016.74%5.48%
201926.8%15.57%
2018-9.67%-5.67%
201724.19%9.98%
20168.77%9.41%
2015-1.88%0.43%
20143.97%6.69%
201322.98%-7.42%
201217.33%17.64%
2011-7.71%7.2%
201013.05%11.47%

VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% 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

VT vs. EMB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VT$10,000$27,73910.42%
EMB$10,000$19,2956.43%

A $10,000 investment in VT would have resulted in a final balance of $27,739. This is a profit of $17,739 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.42%.

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%.

VT’s CAGR is 3.98 percentage points higher than that of EMB and as a result, would have yielded $8,444 more on a $10,000 investment. Thus, VT outperformed EMB by 3.98% annually.

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