The iShares Core MSCI Emerging Markets ETF (IEMG) is the younger, cheaper variation on BlackRock’s flagship iShares MSCI Emerging Markets ETF (EEM). IEMG debuted in 2012 as part of the new ultra-low-cost iShares Core series, which was designed to attract buy-and-hold investors.
IEMG delivers broad exposure to emerging markets equities included the popular MSCI emerging market benchmarks, and does it for a fraction of the price charged by the legacy iShares fund. IEMG also includes smaller-cap names ignored by its older sibling, making it a staple holding of long-term investors who want exposure to emerging markets.
IEMG’s massive size makes it easy for institutional investors to buy and sell large blocks. But its pricier sibling is still favored by active traders, who prefer EEM for its deep liquidity, tight tracking and massive options market.
While IEMG beats EEM on fees, it is still not as cheap as rivals like the Vanguard Emerging Markets ETF (VWO) or Charles Schwab’s Emerging Markets Equity ETF (SCHE). But investors should note a critical difference: Both VWO and SCHE track an indexes that exclude South Korea, which is instead classified with developed markets, whereas the iShares funds follow MSCI benchmarks that lump South Korea in with emerging markets.
Unsuspecting investors who mix and match funds from different firms may find themselves either unintentionally overweight South Korea, or missing out on the country entirely.