DBEM vs IEMG

DBEMCXtrackers MSCI Emerging Markets Hedged Equity ETF

IEMGAiShares Core MSCI Emerging Markets ETF

In short

DBEM Most emerging-markets funds hand you two bets: the stocks and the currencies. DBEM keeps the first and damps the second, tracking an MSCI EM index built to reduce the effect of dollar moves against selected emerging-market currencies.

IEMG iShares' emerging-markets workhorse: large, mid and small caps across developing economies in one fund at 0.09% a year, against a 0.66% median for its peer group. Built as a cheap core holding, not a tactical trade.

Stated mandate

DBEM Using a passive indexing approach, the Fund seeks returns that generally track the MSCI EM US Dollar Hedged Index before fees and expenses. The index provides emerging-market equity exposure while reducing the effect of U.S.-dollar movements against selected emerging-market currencies.

IEMG The fund seeks to track an index representing large-, mid- and small-capitalization equities from emerging markets.

Why people hold it

• DBEM A rare thing in US-listed EM core: a passive wrapper with a built-in currency overlay. It tracks the MSCI EM US Dollar Hedged Index rather than leaving the whole FX leg open.
• Broad, not a narrow slice. Passive indexing across roughly 1,200 emerging-market stocks, so the hedge sits on top of full-market exposure.
• Trading since 2011, so the hedging machinery has run through multiple dollar cycles instead of arriving with the latest FX fashion.

• IEMG Charges 0.09% a year while the typical fund in its peer group takes 0.66%. The older in-house sibling EEM charges 0.72% for a narrower large- and mid-cap index.
• Tracks the MSCI Emerging Markets IMI, which targets about 99% of each country's free float and reaches into the small caps that large- and mid-cap EM funds skip. Roughly 2,800 holdings.msci.comishares.com
• One of the largest and most heavily traded funds in the category, which typically shows up as tight spreads for the person clicking buy.
• No currency hedge, no ex-China carve-out, no climate screen. Straight cap-weighted emerging-markets exposure, and one of the strongest implementations in its peer group.

Worth knowing

• DBEM The overlay costs: 0.66% a year, against 0.09% for plain unhedged IEMG. That gap buys the currency mechanics, not different stocks.
• The index hedges selected emerging-market currencies, not all of them, so some dollar moves still flow through to returns.
• One of the thinner-traded, smaller-asset names in its EM peer group, which generally shows up as wider bid-ask spreads than the category giants.

• IEMG Emerging markets bring currency, political and liquidity risks that developed-market equity does not, and the prospectus spells that out. Expect a bumpier ride.ishares.com
• Cap weighting means a handful of countries and their biggest companies drive most of the move, even with roughly 2,800 names in the basket.msci.com
• Cash comes back once or twice a year rather than monthly, so income arrives in lumps.

Full DBEM profile⁠

Full IEMG profile⁠