The Vanguard Total International Stock Index Fund ETF Shares (VXUS) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VXUS is a Vanguard Foreign Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VXUS and EMB? And which fund is better?
The expense ratio of VXUS is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%). VXUS also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, VXUS has provided higher returns than EMB over the past ten years.
In this article, we’ll compare VXUS vs. EMB. We’ll look at fund composition and industry exposure, as well as at their annual returns and performance. Moreover, I’ll also discuss VXUS’s and EMB’s portfolio growth, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Vanguard Total International Stock Index Fund ETF Shares||iShares J.P. Morgan USD Emerging Markets Bond ETF|
|Category||Foreign Large Blend||Emerging Markets Bond|
The Vanguard Total International Stock Index Fund ETF Shares (VXUS) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 404.73B total assets under management and has yielded an average annual return of 8.41% over the past 10 years. The fund has a dividend yield of 2.44% 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%.
VXUS’s dividend yield is 1.41% lower than that of EMB (2.44% vs. 3.85%). Also, VXUS yielded on average 1.97% more per year over the past decade (8.41% vs. 6.43%). The expense ratio of VXUS is 0.31 percentage points lower than EMB’s (0.08% vs. 0.39%).
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|Taiwan Semiconductor Manufacturing Co Ltd||1.62%|
|Tencent Holdings Ltd||1.41%|
|Alibaba Group Holding Ltd Ordinary Shares||1.26%|
|Samsung Electronics Co Ltd||1.05%|
|ASML Holding NV||0.86%|
|Roche Holding AG||0.81%|
|Toyota Motor Corp||0.67%|
|LVMH Moet Hennessy Louis Vuitton SE||0.61%|
VXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.62%, 1.41%, 1.26%, 1.1%, and 1.05%.
ASML Holding NV (0.86%), Roche Holding AG (0.81%), and Toyota Motor Corp (0.67%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VXUS’s holdings at 0.61% and 0.6%.
|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.
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The Vanguard Total International Stock Index Fund ETF Shares (VXUS) has a Alpha of 0.31 with a Mean Return of 0.56 and a Beta of 0.99. Its R-squared is 98.39 while VXUS’s Standard Deviation is 15.12. Furthermore, the fund has a Sharpe Ratio of 0.4 and a Treynor Ratio of 5.14.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Standard Deviation of 8.44 with a Treynor Ratio of 3.24 and a Alpha of 0.89. Its Mean Return is 0.44 while EMB’s Beta is 1.36. Furthermore, the fund has a Sharpe Ratio of 0.55 and a R-squared of 23.34.
VXUS’s Mean Return is 0.12 points higher than that of EMB and its R-squared is 75.05 points higher. With a Standard Deviation of 15.12, VXUS is slightly more volatile than EMB. The Alpha and Beta of VXUS are 0.58 points lower and 0.37 points lower than EMB’s Alpha and Beta.
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VXUS had its best year in 2017 with an annual return of 27.52%. VXUS’s worst year over the past decade yielded -14.42% and occurred in 2018. In most years the Vanguard Total International Stock Index Fund ETF Shares provided moderate returns such as in 2010, 2016, and 2020 where annual returns amounted to 0.0%, 4.72%, and 11.32% 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 VXUS would have resulted in a final balance of $19,315. This is a profit of $9,315 over 9 years and amounts to a compound annual growth rate (CAGR) of 8.41%.
With a $10,000 investment in EMB, the end total would have been $16,147. This equates to a $6,147 profit over 9 years and a compound annual growth rate (CAGR) of 6.43%.
VXUS’s CAGR is 1.97 percentage points higher than that of EMB and as a result, would have yielded $3,168 more on a $10,000 investment. Thus, VXUS outperformed EMB by 1.97% annually.
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