Better Emerging Markets ETF: Vanguard's VWO vs. iShares' EEM

Core Insights - The iShares MSCI Emerging Markets ETF (EEM) is more expensive and volatile compared to the Vanguard FTSE Emerging Markets ETF (VWO), which offers broader holdings, lower fees, and a slightly higher yield, but has lagged EEM in recent total return [1][2] Cost Comparison - EEM has an expense ratio of 0.72%, while VWO has a significantly lower expense ratio of 0.07%, making VWO more affordable [3][4] - EEM's one-year return as of December 18, 2025, is 26.8%, compared to VWO's 19.0% [3] - VWO offers a higher dividend yield of 2.8% compared to EEM's 2.2% [4] Performance & Risk Analysis - Over the past five years, EEM experienced a maximum drawdown of 39.82%, while VWO had a lower maximum drawdown of 34.33% [5] - The growth of $1,000 invested over five years is $1,043 for EEM and $1,071 for VWO, indicating VWO's better performance in this period [5] Portfolio Composition - VWO tracks over 2,000 stocks with major sectors including technology (23%), financial services (21%), and consumer cyclical (13%), with top holdings in Taiwan Semiconductor Manufacturing, Tencent Holdings, and Alibaba Group [6] - EEM holds 1,215 stocks with similar sector allocations: technology (27%), financial services (22%), and consumer cyclical (12%), with major positions in Taiwan Semiconductor Manufacturing, Tencent Holdings, and Samsung Electronics [7] Investment Implications - Both EEM and VWO provide similar exposure to emerging markets, but EEM includes South Korean stocks, which has contributed to its stronger performance over the past year [9] - VWO is considered more compelling due to its larger assets under management of $141.2 billion compared to EEM's $20.5 billion, providing greater liquidity and lower costs for investors [10]