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VTV vs. IEMG: What’s The Difference?

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

The expense ratio of VTV is 0.07 percentage points lower than IEMG’s (0.04% vs. 0.11%). VTV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided higher returns than IEMG over the past ten years.

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

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Summary

VTVIEMG
NameVanguard Value Index Fund ETF SharesiShares Core MSCI Emerging Markets ETF
CategoryLarge ValueDiversified Emerging Mkts
IssuerVanguardiShares
AUM125.77B83.68B
Avg. Return12.07%7.41%
Div. Yield2.15%1.78%
Expense Ratio0.04%0.11%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.

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%.

VTV’s dividend yield is 0.37% higher than that of IEMG (2.15% vs. 1.78%). Also, VTV yielded on average 4.67% more per year over the past decade (12.07% vs. 7.41%). The expense ratio of VTV is 0.07 percentage points lower than IEMG’s (0.04% vs. 0.11%).

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Fund Composition

Industry Exposure

VTV vs. IEMG - Industry Exposure

VTVIEMG
Technology7.86%20.44%
Industrials12.61%5.92%
Energy5.59%4.71%
Communication Services5.49%11.41%
Utilities5.37%2.13%
Healthcare19.84%5.73%
Consumer Defensive10.72%5.68%
Real Estate3.01%2.75%
Financial Services22.81%16.9%
Consumer Cyclical3.79%15.67%
Basic Materials2.91%8.64%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 5.91% more exposed to the Financial Services sector than IEMG (22.81% vs 16.9%). VTV’s exposure to Healthcare and Industrials stocks is 14.11% higher and 6.69% higher respectively (19.84% vs. 5.73% and 12.61% vs. 5.92%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 8.38% less of the fund’s holdings compared to IEMG (12.17% vs. 20.55%).

Holdings

VTV - Holdings

VTV HoldingsWeight
Berkshire Hathaway Inc Class B2.98%
JPMorgan Chase & Co2.82%
Johnson & Johnson2.6%
UnitedHealth Group Inc2.27%
Procter & Gamble Co1.98%
Bank of America Corp1.91%
Exxon Mobil Corp1.6%
Comcast Corp Class A1.57%
Intel Corp1.36%
Verizon Communications Inc1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

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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Risk Analysis

VTVIEMG
Mean Return1.050
R-squared92.610
Std. Deviation13.780
Alpha-1.920
Beta0.980
Sharpe Ratio0.870
Treynor Ratio11.940

The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Alpha of -1.92 and a Sharpe Ratio of 0.87. Its R-squared is 92.61 while VTV’s Treynor Ratio is 11.94. Furthermore, the fund has a Beta of 0.98 and a Standard Deviation of 13.78.

The iShares Core MSCI Emerging Markets ETF (IEMG) has a Standard Deviation of 0 with a Sharpe Ratio of 0 and a R-squared of 0. Its Beta is 0 while IEMG’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a Mean Return of 0.

VTV’s Mean Return is 1.05 points higher than that of IEMG and its R-squared is 92.61 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than IEMG. The Alpha and Beta of VTV are 1.92 points lower and 0.98 points higher than IEMG’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. IEMG - Annual Returns

YearVTVIEMG
20202.23%18.18%
201925.85%17.5%
2018-5.39%-14.69%
201717.12%36.78%
201616.88%9.98%
2015-0.89%-13.86%
201413.19%-2.04%
201333.03%-2.16%
201215.19%0.0%
20111.16%0.0%
201014.45%0.0%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. IEMG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VTV$10,000$18,69212.07%
IEMG$10,000$15,0377.41%

A $10,000 investment in VTV would have resulted in a final balance of $18,692. This is a profit of $8,692 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 4.67 percentage points higher than that of IEMG and as a result, would have yielded $3,655 more on a $10,000 investment. Thus, VTV outperformed IEMG by 4.67% annually.


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