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South Korea is the difference between VWO and IEMG

The fee gap is $3 a year on $10,000, and which fund to own depends on the developed-markets fund you already hold.

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People cross a street lined with modern commercial high-rises in a sunny business district of Seoul, South Korea.

Key takeaways

  • The Vanguard FTSE Emerging Markets ETF leaves South Korea out because FTSE calls it developed.
  • Korea was 22.5% of BlackRock's iShares Core MSCI Emerging Markets ETF, second only to Taiwan.
  • MSCI kept South Korea emerging because the won cannot be freely exchanged outside Korea.
  • Which fund to own depends on whether your developed-markets fund already includes South Korea.
  • The yearly fee gap is $3 and will not settle which emerging-markets fund to own.

South Korea is what separates the Vanguard FTSE Emerging Markets ETF, VWO, from BlackRock's iShares Core MSCI Emerging Markets ETF, IEMG.

IEMG tracks the MSCI Emerging Markets Investable Market Index. MSCI classifies South Korea as an emerging market, so the country is in the fund.

VWO tracks the FTSE Emerging Markets All Cap China A Inclusion Index. FTSE classifies South Korea as developed, so the index leaves Korea out.

The China wording in that name is not a second difference. China is in both funds.

On June 23, 2026, MSCI kept South Korea in emerging markets. Foreign investors cannot freely exchange the Korean won outside Korea, MSCI said, and investors have told it that problem is not fixed.

A move to developed markets would take Korea out of the index IEMG tracks. MSCI did not make that move.

Where the weight sits

On June 30, 2026, BlackRock's fact sheet put South Korea at 22.5% of IEMG, second only to Taiwan.

Samsung Electronics and SK Hynix were 14.6% of IEMG on that fact sheet. Neither company is among VWO's ten largest holdings on Vanguard's fact sheet for the same date.

On a weight basis, 74.7% of the two funds overlaps.

The return gap belongs to the indexes

In the year ended June 30, 2026, including dividends, BlackRock reported a return of 42.5% for IEMG and 40.3% for the index it tracks. Vanguard reported 24.1% for VWO and 22.4% for its index.

Each fund tracked its index. The gap between the funds belongs to the indexes.

In 2024, including dividends, the advantage flipped. Vanguard reported 11.0% for VWO and 11.6% for its index. BlackRock reported 6.9% for IEMG and 7.1% for its index.

The lead flipped after 2024

Issuer-reported returns, including dividends, calendar 2024 and year ended June 30, 2026

  • IEMG
  • VWO
  • 2024
    • IEMG 6.9%
    • VWO 11%
  • Year to Jun 2026
    • IEMG 42.5%
    • VWO 24.1%

The later gap ran much wider.

The fee will not settle it

Vanguard charges 0.06% for VWO. BlackRock charges 0.09% for IEMG. On $10,000, the difference is $3 a year. It does not explain the return gap, and it will not close one.

Which fund to own

Match the developed-markets fund you already own, whichever company runs it. The test is whether its index includes South Korea.

If it does, choose VWO. Adding IEMG would count Korea twice.

The Vanguard FTSE Developed Markets ETF, VEA, is the usual example. It tracks a FTSE index of developed markets outside the United States, so Korea is already in the fund. On June 30, 2026, Korea was 10.2% of its stocks, and Samsung Electronics was its largest holding.

Pairing VEA with IEMG puts Samsung in both.

If your developed-markets fund does not include South Korea, choose IEMG. Adding VWO would leave Korea out of the portfolio entirely.

The iShares Core MSCI EAFE ETF, IEFA, is the usual example on that side. EAFE is MSCI's name for developed markets in Europe, Australasia and the Far East. MSCI classifies Korea as emerging, so IEFA's index does not include it.

A developed-markets fund from any other company follows the same test: whether its index includes South Korea.

If this is your only emerging-markets fund, the fee is not the question. The question is whether you want South Korea in it. Choose IEMG if you do. Choose VWO if you want Korea left out.

Do not buy both. You would hold the shared stocks twice, and a Korea weight you never chose.

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ETFs in this story

AVWOVanguard FTSE Emerging Markets ETF76/100AIEMGiShares Core MSCI Emerging Markets ETF76/100AVEAVanguard FTSE Developed Markets ETF79/100AIEFAiShares Core MSCI EAFE ETF76/100

Frequently asked questions

Why is South Korea in one fund and not the other?

FTSE classifies South Korea as developed, so the Vanguard FTSE Emerging Markets ETF leaves it out, while MSCI classifies it as emerging, so BlackRock's iShares Core MSCI Emerging Markets ETF includes it.

Did MSCI move South Korea to developed markets?

No, on June 23, 2026, MSCI kept South Korea in emerging markets because foreign investors cannot freely exchange the Korean won outside Korea.

Does the fee gap explain the return difference?

No, the fee gap is $3 a year on $10,000, and the return gap belongs to the indexes each fund tracked.

What if my developed-markets fund already includes South Korea?

Adding BlackRock's iShares Core MSCI Emerging Markets ETF would count Korea twice.

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