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Written by Sara Appino for The Motley Fool->
iShares Core MSCI Emerging Markets ETF provides concentrated exposure to developing economies with higher recent returns but also greater historical drawdowns than iShares Core MSCI Total International Stock ETF.
iShares Core MSCI Total International Stock ETF offers a lower expense ratio and broader diversification across both developed and emerging markets compared to the more focused iShares Core MSCI Emerging Markets ETF.
iShares Core MSCI Total International Stock ETF has provided a higher distribution yield and better risk-adjusted growth over the last five years than iShares Core MSCI Emerging Markets ETF.
The iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) provides broad global exposure, whereas the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) targets specific growth and volatility within developing economies.
Both funds offer low-cost access to non-U.S. equities, yet they serve different roles in a portfolio. While IXUS covers the entire international landscape, IEMG focuses exclusively on emerging markets, leading to distinct risk profiles and sector concentrations for investors looking to diversify outside domestic borders.
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares Core MSCI Total International Stock ETF is slightly more affordable with a 0.07% expense ratio compared to 0.09% for the iShares Core MSCI Emerging Markets ETF. Investors may also find the 2.9% distribution yield of the international fund more attractive than the 2.2% offered by the emerging markets fund.
The iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) focuses on developing economies, with technology representing 23%, financials at 18%, and consumer discretionary at 7% of the portfolio. Its largest positions include Taiwan Semiconductor Manufacturing at 12.56%, Samsung Electronics at 5.39%, and SK Hynix at 3.87%. Launched in 2012, this fund holds 2,661 securities and has a trailing-12-month dividend of $1.85 per share.
In contrast, the iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) provides broader reach with 4,160 holdings and covers both developed and emerging regions. Its sector mix leans toward financial services at 23%, followed by industrials and technology at 16% each. Its top holdings include Taiwan Semiconductor Manufacturing at 4.11%, Samsung Electronics at 1.77%, and ASML Holding at 1.31%. Also launched in 2012, it has paid $2.74 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
For investors looking beyond U.S. borders, the choice often comes down to how much risk they want to take on. Developed markets such as Japan, the U.K., France, and Germany offer international diversification with relatively familiar regulatory and economic environments. Emerging markets of China, India, Taiwan, and South Korea offer higher growth potential but with greater volatility, currency risk, and political uncertainty.
IXUS captures both worlds in a single fund, holding over 4,000 stocks across developed and emerging markets outside the U.S. About three-quarters of the portfolio sits in developed markets, with emerging markets making up the remainder. IEMG concentrates entirely on the emerging markets portion of that equation, going deeper into countries and companies that IXUS holds only partially.
The fee difference between them is negligible. The real consideration is portfolio fit. Investors who want straightforward, all-in-one international exposure will find IXUS the more balanced choice. Those who already hold developed market exposure and want to tilt specifically toward emerging market growth — accepting the added volatility — will find IEMG the more targeted vehicle.
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Sara Appino has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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