Key Points
IEFA costs slightly less than IEMG and offers a higher dividend yield
IEMG delivered a stronger 1-year return and experienced a steeper maximum drawdown, but IEFA had higher 5-year returns.
IEFA focuses on developed markets, while IEMG targets emerging markets with a tech and financial tilt
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While both the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) and iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) offer broad international equity exposure at low cost, IEFA trades at a marginally lower expense ratio and yields more, whereas IEMG has outperformed over the past year and covers riskier, higher-growth emerging markets.
IEMG and IEFA are both core international ETFs from iShares, but they track different global slices: IEMG focuses on emerging markets, while IEFA excludes the U.S. and Canada, and emerging economies, instead targeting developed markets in Europe, Asia, and Australia. This comparison highlights where each fund stands on cost, performance, risk, portfolio makeup, and trading ease.
Snapshot (Cost & Size)
| Metric | IEMG | IEFA |
|---|---|---|
| Issuer | IShares | IShares |
| Expense ratio | 0.09% | 0.07% |
| 1-yr return (as of 2026-01-30) | 35.3% | 26.6% |
| Dividend yield | 2.5% | 3.4% |
| Beta | 0.65 | 0.85 |
| AUM | $141.4 billion | $174.1 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
IEFA looks a bit more affordable with its 0.07% fee compared to IEMG’s 0.09%, and it also pays a higher dividend yield by nearly a full percentage point, which may appeal to income-focused investors.
Performance & Risk Comparison
| Metric | IEMG | IEFA |
|---|---|---|
| Max drawdown (5 y) | -37.16% | -30.41% |
| Growth of $1,000 over 5 years | $1,106 | $1,353 |
What's Inside
IEFA holds about 2,589 developed-market stocks across Europe, Asia, and Australia, with its largest sector weights in financial services (22%), industrials (20%), and healthcare (11%). Top positions include ASML Holding NV, Roche Holding Par AG, and HSBC Holdings PLC. The fund has a 13.3-year track record and is designed to mirror developed markets outside North America.
IEMG, in contrast, tracks around 2,725 stocks from emerging economies, leaning heavily on technology (26%) and financial services (21%), with Taiwan Semiconductor Manufacturing, Samsung Electronics Ltd, and Tencent Holdings Ltd among its largest holdings. This gives IEMG greater exposure to higher-growth, higher-risk regions and sectors compared to IEFA’s developed-market focus.
For more guidance on ETF investing, check out the full guide at this link.
What This Means For Investors
Both the iShares Core MSCI Emerging Markets ETF (IEMG) and iShares Core MSCI EAFE ETF (IEFA) funds provide investors a way to invest in international markets, however they do so in contrasting ways. Here’s what investors need to know.
First, IEMG is an emerging markets fund. Consequently, its holdings are overwhelmingly based in the Asian region (78% of total holdings), with only 13% in Europe, and 9% in North, Central, and South America. IEFA, on the other hand, focuses on developed markets across Europe (63%) and Asia (35%).
Yet, despite this difference in mission, the two funds have remarkably similar performance histories. Over the last ten years, IEMG has delivered a total return of 167%, equating to a compound annual growth rate (CAGR) of 10.3%. IEFA, meanwhile, has advanced by 156%, with a CAGR of 9.9%. Both funds have underperformed the S&P 500, which has advanced by 336%, or a CAGR of 15.9%.
Nevertheless, for investors seeking out international exposure, both IEMG and IEFA are worth considering. Both funds have affordable expense ratios and have delivered CAGRs near or above 10% dating back over the last decade. IEMG may be favored by investors focused solely on total return, while cost-conscious investors might favor IEFA due to its lower fees and higher dividend yield.
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HSBC Holdings is an advertising partner of Motley Fool Money. Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool recommends HSBC Holdings and Roche Holding AG. 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.
