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.
Summary
| VTI | IEMG | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | iShares Core MSCI Emerging Markets ETF |
| Category | Large Blend | Diversified Emerging Mkts |
| Issuer | Vanguard | iShares |
| AUM | 1.26T | 83.68B |
| Avg. Return | 14.70% | 7.41% |
| Div. Yield | 1.26% | 1.78% |
| Expense Ratio | 0.03% | 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%).
Fund Composition
Industry Exposure
| VTI | IEMG | |
| Technology | 24.1% | 20.44% |
| Industrials | 9.39% | 5.92% |
| Energy | 2.77% | 4.71% |
| Communication Services | 10.4% | 11.41% |
| Utilities | 2.29% | 2.13% |
| Healthcare | 13.64% | 5.73% |
| Consumer Defensive | 5.77% | 5.68% |
| Real Estate | 3.59% | 2.75% |
| Financial Services | 13.77% | 16.9% |
| Consumer Cyclical | 11.83% | 15.67% |
| Basic Materials | 2.44% | 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 | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| 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%.
| 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
| Year | VTI | IEMG |
| 2020 | 20.95% | 18.18% |
| 2019 | 30.8% | 17.5% |
| 2018 | -5.13% | -14.69% |
| 2017 | 21.16% | 36.78% |
| 2016 | 12.68% | 9.98% |
| 2015 | 0.4% | -13.86% |
| 2014 | 12.56% | -2.04% |
| 2013 | 33.51% | -2.16% |
| 2012 | 16.41% | 0.0% |
| 2011 | 1.06% | 0.0% |
| 2010 | 17.26% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $23,156 | 14.70% |
| IEMG | $10,000 | $15,037 | 7.41% |
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.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
