Wealthy PotIEMG vs VWO: Two Low-Cost Emerging Markets ETFs Compared
IEMG and VWO are the two most popular low-cost ways to own emerging markets, and both are far cheaper than the old-guard EEM. The two real differences: a small fee gap, and one holds South Korea while the other excludes it, which changes both the portfolio and the recent returns. This guide uses figures from the funds' own documents.
The Short Answer
- Want the cheapest broad emerging-markets fund, with more China and India? VWO. It costs 0.06%, holds far more stocks (including small caps and mainland China A-shares), and excludes South Korea.
- Want South Korea in the mix (MSCI's definition of emerging markets)? IEMG. At 0.09% it holds ~22% South Korea (Samsung, SK Hynix), which VWO leaves out, and that Korea exposure drove its higher recent return.
Both are excellent, cheap core EM funds. The decision is really about whether you want Korea in your emerging-markets sleeve.
The Key Difference: South Korea
Just like the classic EEM vs VWO matchup, this comes down to how each index provider classifies South Korea:
- IEMG tracks the MSCI Emerging Markets Investable Market Index, and MSCI counts South Korea as emerging. So IEMG holds it, heavily: Korea is about 22.5% of the fund, including big positions in Samsung Electronics (~7%) and other chipmakers.
- VWO tracks the FTSE Emerging Markets All Cap China A Inclusion Index, and FTSE calls South Korea developed. So VWO holds no Korea at all. In its place you get more China (~25.6%, including mainland A-shares) and more India (~16.5%).
That's nearly a quarter of IEMG that simply doesn't exist in VWO. IEMG is also the low-cost "Core" cousin of the pricier EEM, same MSCI index, a fraction of the fee.
IEMG vs VWO Side by Side
| Feature | IEMG | VWO |
|---|---|---|
| Fund | iShares Core MSCI Emerging Markets | Vanguard FTSE Emerging Markets |
| Index tracked | MSCI Emerging Markets IMI | FTSE Emerging Markets All Cap China A Inclusion |
| Expense ratio | 0.09% | 0.06% |
| Number of holdings | ~2,827 | ~6,332 |
| South Korea | ~22.5% (holds it) | 0% (excluded) |
| China | ~17.7% | ~25.6% (incl. China A-shares) |
| India | ~12.2% | ~16.5% |
| SEC 30-day yield | ~1.59% | (check current) |
| 10-year return (avg annual, NAV) | 10.13% | 8.49% |
| Growth of $10,000 over those 10 years (hypothetical) | $26,250 | $22,590 |
Why IEMG Returned More
Over the past decade IEMG returned about 10.1% a year versus VWO's 8.5%. It's tempting to call IEMG the better fund, but the gap traces mostly to South Korea, which VWO doesn't own. Korean chipmakers like Samsung and SK Hynix rallied hard during the AI-driven memory boom, and that ~22% Korea slice did much of the heavy lifting.
So IEMG's edge is really a bet on Korean semiconductors, not proof of a better-built fund. VWO's tilt toward China (including A-shares) and India could just as easily lead in the next cycle. Regions rotate; choosing IEMG purely for its trailing return is the recency-bias trap covered in why time in the market beats timing it.
Which One Fits You
Choose VWO if: you want the cheapest broad emerging-markets fund, are comfortable without South Korea, and like the heavier China (including A-shares), India, and small-cap coverage. It's the lowest-cost pick and holds the most stocks.
Choose IEMG if: you specifically want South Korea included (the MSCI definition of emerging markets) and the exposure to Samsung and the Korean chip complex, at a low fee. It's also the cheap way to get EEM's exposure, see EEM vs VWO for that comparison. The 0.03% fee difference versus VWO is minor next to the Korea question.
FAQ
Is IEMG or VWO better?
Both are excellent low-cost emerging-markets ETFs. VWO is cheaper (0.06% vs 0.09%), holds more stocks, and has more China and India but no South Korea; IEMG holds ~22% South Korea (Samsung, chipmakers), which lifted its recent return. Choose VWO for the lowest cost and more China/India, IEMG if you want Korea included.
Why does VWO not hold South Korea?
VWO's index provider, FTSE, classifies South Korea as a developed market, so it's excluded. IEMG's provider, MSCI, still calls Korea emerging, so IEMG holds it (~22.5% of the fund). Same reason the classic EEM holds Korea and VWO doesn't.
What's the difference between IEMG and EEM?
Both are iShares funds tracking MSCI emerging markets (including South Korea), but IEMG is the low-cost "Core" version at 0.09%, while EEM charges far more (0.72%) and is aimed at traders. For long-term holding, IEMG is the cheaper choice, and it's the more direct low-cost rival to VWO.
Why did IEMG outperform VWO?
Mostly South Korea, which VWO doesn't own. Korean semiconductor stocks surged during the AI memory boom, and IEMG's ~22% Korea weight captured that. It reflects a country/sector bet, not a better-run fund, and past performance doesn't predict the future.
Related comparisons: EEM vs VWO · VTI vs VXUS · VT vs VTI · All ETF comparisons
Primary sources: expense ratios, indexes, holdings, country weights, and returns are from the official fund fact sheets for IEMG (iShares) and VWO (Vanguard), both as of Jun 30, 2026. For background, see the SEC's Investor.gov guide to mutual funds and ETFs.
This article is for educational purposes only and is not investment advice. Investing involves risk, including possible loss of principal, and past performance does not guarantee future results. Emerging-market investing carries additional risks including currency, political, and liquidity risk. Expense ratios, holdings, and country weights change over time; confirm current figures on the issuer's site before investing. Consult a qualified financial professional before making investment decisions.