South Korea, tech tilt lift IEMG past VWO YTD

The iShares Core MSCI Emerging Markets ETF (IEMG) has delivered roughly twice the year‑to‑date total return of Vanguard’s FTSE Emerging Markets ETF (VWO) through May 26, 2026. The gap in returns is linked to country and sector exposure.

IEMG tracks the MSCI Emerging Markets Investable Market Index (IMI). MSCI continues to classify South Korea as an emerging market, citing restrictions in its offshore currency exchange market and foreign investor registration rules. VWO follows the FTSE Emerging Markets All Cap China A Inclusion Index. FTSE Russell classifies South Korea as a developed market, so VWO’s index excludes South Korea.

South Korea represented about 21% of IEMG as of May 26, 2026. Samsung Electronics and SK Hynix have market capitalizations above $1 trillion each and together make up just over 12% of IEMG’s weight. The MSCI Korea Index and the iShares MSCI South Korea ETF (EWY) have outperformed the broader MSCI Emerging Markets Index year to date.

Sector exposure has also affected returns. The MSCI World Information Technology Index rose about 19% year to date, while the multi‑sector MSCI World Index rose roughly 9% over the same period. IEMG has a larger allocation to information technology than VWO, even though the funds share about 74% of their holdings. The heavier technology weighting and concentrated Korean positions contributed to IEMG’s lead.

The funds differ in construction and costs. VWO holds about 4,960 stocks across large, mid and small caps and charges a 0.08% expense ratio. IEMG holds about 2,608 stocks and charges a 0.09% expense ratio. Vanguard’s Vanguard FTSE Developed Markets ETF (VEA) includes South Korea for investors seeking that market within Vanguard’s fund lineup.

Differences in index methodology and resulting country and sector weights can produce substantially different exposures and returns for funds that are both labeled “emerging market.”