Two emerging-markets ETFs, two different Asia trades
Key Points
iShares Core MSCI Emerging Markets ETF maintains a significantly larger assets under management (AUM) of $155.0 billion compared to the Schwab Emerging Markets Equity ETF
Schwab Emerging Markets Equity ETF offers a lower expense ratio of 0.07% while providing a higher dividend yield of 2.60%
iShares Core MSCI Emerging Markets ETF has delivered higher 1-year total returns but experienced a deeper maximum drawdown over the last five years
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The Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) offers a lower cost of entry for long-term holders, while the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) provides broader market coverage and significantly higher liquidity that may appeal to institutional or active traders.
Both ETFs seek to provide low-cost exposure to emerging economies like China, India, and Taiwan. While they overlap significantly in their top holdings, differences in index tracking and market-cap inclusion mean they offer distinct risk-return profiles for investors looking to diversify beyond domestic markets and capture growth in developing regions.
Snapshot (cost & size)
| Metric | SCHE | IEMG |
|---|---|---|
| Issuer | Schwab | iShares |
| Expense ratio | 0.07% | 0.09% |
| 1-yr return (as of May 6, 2026) | 33.6% | 52.1% |
| Dividend yield | 2.6% | 2.2% |
| Beta | 0.59 | 0.72 |
| AUM | $12.7B | $159.7B |
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 Schwab fund is slightly more affordable for cost-conscious investors with its 0.07% expense ratio. It also provides a higher payout for income seekers, featuring a trailing-12-month dividend yield of 2.6% compared to 2.2% for the iShares fund, which translates to a yield gap of 0.4 percentage points.
Performance & risk comparison
| Metric | SCHE | IEMG |
|---|---|---|
| Max drawdown (5 yr) | (35.7%) | (37.1%) |
| Growth of $1,000 over 5 years (total return) | $1,321 | $1,437 |
What's inside
The iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) launched in 2012 and holds 2,661 securities. Its largest positions include Taiwan Semiconductor Manufacturing(NYSE:TSM) at 12.56%, Samsung Electronics Ltd(OTC:SSNLF) at 5.39%, and Sk Hynix Inc(BDL:HYNSE) at 3.87%. The portfolio leans toward technology at 23%, followed by basic materials at 20% and financial services at 17%. Over the trailing 12 months, it paid $1.85 per share in dividends.
Contrastingly, the Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) launched in 2010 and maintains a smaller basket of 2,213 holdings. Its top holdings include TSM at 16.43%, Tencent Holdings Ltd(OTC:TCEHY) at 3.51%, and Alibaba Group Holding Ltd(NYSE:BABA) at 2.82%. The sector mix is led by technology at 27% and financial services at 22%. The fund has a trailing-12-month dividend of $0.94 per share.
What this means for investors
Both funds are anchored by Taiwan Semiconductor at the top, but the next layer diverges sharply. IEMG's number two and three are Samsung Electronics and SK Hynix — roughly 9% of the fund in Korean memory and semiconductor names. SCHE's number two and three are Tencent and Alibaba — about 6% of the fund in Chinese internet platforms. That changes what you actually own. Sector weights tell the same story from a different angle: SCHE is 27% tech and 22% financials; IEMG is 23% tech and 20% materials — meaning SCHE skews toward platform businesses and Chinese state-linked banks, while IEMG carries more exposure to the commodity and industrial base that feeds the hardware cycle. If your emerging-markets thesis is a constructive call on Chinese consumer tech, SCHE leans your way. If you'd rather own the Korean memory cycle and the AI buildout that's driving it, IEMG does. In a concentrated index where the top ten holdings carry most of the return, that choice is the core decision.
For more guidance on ETF investing, check out the full guide at this link.
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Seena Hassouna has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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