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VTI vs. IEMG: What’s The Difference?

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares Core MSCI Emerging Markets ETF (IEMG) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IEMG is a iShares Diversified Emerging Mkts fund. So, what’s the difference between VTI and IEMG? And which fund is better?

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

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

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Summary

VTIIEMG
NameVanguard Total Stock Market Index Fund ETF SharesiShares Core MSCI Emerging Markets ETF
CategoryLarge BlendDiversified Emerging Mkts
IssuerVanguardiShares
AUM1.26T83.68B
Avg. Return14.70%7.41%
Div. Yield1.26%1.78%
Expense Ratio0.03%0.11%

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 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%.

VTI’s dividend yield is 0.52% lower than that of IEMG (1.26% vs. 1.78%). Also, VTI yielded on average 7.29% more per year over the past decade (14.70% vs. 7.41%). The expense ratio of VTI is 0.08 percentage points lower than IEMG’s (0.03% vs. 0.11%).

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Fund Composition

Industry Exposure

VTI vs. IEMG - Industry Exposure

VTIIEMG
Technology24.1%20.44%
Industrials9.39%5.92%
Energy2.77%4.71%
Communication Services10.4%11.41%
Utilities2.29%2.13%
Healthcare13.64%5.73%
Consumer Defensive5.77%5.68%
Real Estate3.59%2.75%
Financial Services13.77%16.9%
Consumer Cyclical11.83%15.67%
Basic Materials2.44%8.64%

The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.

VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.

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%.

VTI is 3.66% more exposed to the Technology sector than IEMG (24.1% vs 20.44%). VTI’s exposure to Financial Services and Healthcare stocks is 3.13% lower and 7.91% higher respectively (13.77% vs. 16.9% and 13.64% vs. 5.73%). In total, Basic Materials, Energy, and Real Estate also make up 7.30% less of the fund’s holdings compared to IEMG (8.80% vs. 16.10%).

Holdings

VTI - Holdings

VTI HoldingsWeight
Apple Inc4.9%
Microsoft Corp4.6%
Amazon.com Inc3.33%
Facebook Inc Class A1.88%
Alphabet Inc Class A1.66%
Alphabet Inc Class C1.56%
Tesla Inc1.18%
Berkshire Hathaway Inc Class B1.09%
NVIDIA Corp1.07%
JPMorgan Chase & Co1.06%

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%.

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%.

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Performance

Annual Returns

VTI vs. IEMG - Annual Returns

YearVTIIEMG
202020.95%18.18%
201930.8%17.5%
2018-5.13%-14.69%
201721.16%36.78%
201612.68%9.98%
20150.4%-13.86%
201412.56%-2.04%
201333.51%-2.16%
201216.41%0.0%
20111.06%0.0%
201017.26%0.0%

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 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

VTI vs. IEMG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTI$10,000$23,15614.70%
IEMG$10,000$15,0377.41%

A $10,000 investment in VTI would have resulted in a final balance of $23,156. This is a profit of $13,156 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.70%.

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%.

VTI’s CAGR is 7.29 percentage points higher than that of IEMG and as a result, would have yielded $8,119 more on a $10,000 investment. Thus, VTI outperformed IEMG by 7.29% annually.


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