The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VTI and EMB? And which fund is better?
The expense ratio of VTI is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%). VTI also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, VTI has provided higher returns than EMB over the past ten years.
In this article, we’ll compare VTI vs. EMB. We’ll look at industry exposure and annual returns, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VTI’s and EMB’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
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|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Large Blend||Emerging Markets Bond|
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
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%.
VTI’s dividend yield is 2.59% lower than that of EMB (1.26% vs. 3.85%). Also, VTI yielded on average 8.26% more per year over the past decade (14.70% vs. 6.43%). The expense ratio of VTI is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%).
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|Facebook Inc Class A||1.88%|
|Alphabet Inc Class A||1.66%|
|Alphabet Inc Class C||1.56%|
|Berkshire Hathaway Inc Class B||1.09%|
|JPMorgan Chase & Co||1.06%|
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
|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.
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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 VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
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%.
VTI’s CAGR is 8.26 percentage points higher than that of EMB and as a result, would have yielded $23,353 more on a $10,000 investment. Thus, VTI outperformed EMB by 8.26% annually.
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