VWO and IEMG are the two biggest emerging-markets index ETFs, and they disagree about one country: South Korea. Here is what that means for holdings, returns, risk and cost, and how to pair each one with a developed-markets fund without a gap or a double count.
Market risk reading, cross‑asset context and an events calendar: see Exent Market intel →
Neither is better in general; the right one depends on the developed-markets fund it sits next to. VWO (Vanguard FTSE Emerging Markets ETF) tracks the FTSE Emerging Markets All Cap China A Inclusion Index. IEMG (iShares Core MSCI Emerging Markets ETF) tracks the MSCI Emerging Markets Investable Market Index. Both are broad, cheap and passive. They differ in where they draw the line between developed and emerging, and that line runs through South Korea.
Scope: US investors using an emerging-markets (EM) fund as a small slice of the stock side of a retirement portfolio. Single-country funds, active EM funds and EM bonds are out of scope. If you already own a total-international fund such as VXUS, you already own emerging markets and may not need either (VT vs VTI + VXUS). Education, not investment advice.
| Situation (Oct 2026) | VWO tends to fit | IEMG tends to fit |
|---|---|---|
| Developed fund is VEA or another FTSE fund | Yes: Korea is already in VEA | Doubles up on Korea |
| Developed fund is IEFA or another MSCI EAFE fund | Leaves Korea out entirely | Yes: Korea comes with IEMG |
| You want the lowest fee | Yes: 0.06% | 0.09% |
| You want EM exactly as MSCI defines it | No | Yes |
| You hold VXUS or VT already | Usually not needed | Usually not needed |
Fund facts and trailing returns from the Vanguard and iShares fact sheets as of Sep 30, 2026 (NAV, average annual; IEMG holdings from iShares, Oct 23). Distribution yields, calendar-year returns and drawdowns from Exent market data (daily total return); volatility and correlation are Exent calculations from month-end closes.
| VWO | IEMG | |
|---|---|---|
| Index | FTSE Emerging Markets All Cap China A Inclusion Index | MSCI Emerging Markets Investable Market Index |
| Company sizes | Large, mid and small | Large, mid and small |
| South Korea | 0% (developed under FTSE) | 20.58% |
| Holdings | 6,507 stocks (Sep 30) | 2,853 (Oct 23) |
| Expense ratio | 0.06% | 0.09% |
| Assets | $125.4B ETF / $164.7B whole fund | $160.1B |
| Inception | Mar 4, 2005 | Oct 18, 2012 |
| Top-10 holdings share | 28.4% | 34.24% |
| Distribution yield, trailing 12 months (to Sep 30, 2026) | 2.05% | 2.21% |
| 1-year return | 12.54% | 26.84% |
| 3-year return, per year | 17.91% | 22.94% |
| 5-year return, per year | 6.62% | 8.79% |
| 10-year return, per year | 7.66% | 8.97% |
| 2022 return | −18.0% | −20.0% |
| Largest drop, 5 years to Sep 30, 2026 (daily) | −30.2% | −32.6% |
| Volatility, 5 years | 14.7% | 17.2% |
| Correlation with SPY, 60 months | 0.63 | 0.68 |
Because the index providers classify Korea differently. FTSE Russell’s country table, published Oct 6, 2026, lists South Korea as Developed (FTSE Russell). MSCI’s 2026 review on Jun 23 kept Korea in emerging markets, saying investors told it that the underlying access issues, such as offshore trading of the won, “have not been fully resolved” (MSCI). The same FTSE table lists Poland as Developed; FTSE moved Greece to Developed and Vietnam into its emerging tier on Sep 21, 2026, while MSCI plans to move Greece at its May 2027 review.
The country mix below follows from that. Taiwan, mostly Taiwan Semiconductor Manufacturing, is the biggest weight in both: 16.4% of VWO and 13.71% of IEMG sit in that one company. IEMG’s next names are Samsung Electronics (6.62%) and SK Hynix (5.18%), which VWO does not hold.
| Country, Sep 30, 2026 | VWO | IEMG |
|---|---|---|
| Taiwan | 35.1% | 28.70% |
| China | 26.0% | 18.42% |
| South Korea | 0% | 20.58% |
| India | 16.0% | 11.83% |
| Brazil | 4.5% | 4.01% |
| South Africa | 3.6% | 2.96% |
| Saudi Arabia | 3.0% | 2.39% |
On China A-shares (companies listed in Shanghai and Shenzhen), both indexes include them at partial weights. Vanguard says VWO’s index holds A-shares adjusted for the quotas available to foreign investors (VWO fact sheet). MSCI includes large- and mid-cap A-shares at 20% of their free-float market value (MSCI China Index factsheet). Over the year to Sep 30, 2026, the MSCI China Index returned −18.23% while the MSCI Emerging Markets Index returned 29.65%, which is why the fund with more China and no Korea lagged so far.
Match the provider. VEA (FTSE developed) held 9.2% in Korea and 10.8% in Canada on Sep 30, 2026 (Vanguard); IEFA (MSCI EAFE) held neither. So VEA plus VWO covers the world outside the US with no gap, and IEFA plus IEMG covers it except Canada. Mixing them causes problems: IEFA plus VWO leaves Korea out entirely, and VEA plus IEMG holds Korea twice. A total-international fund like VXUS avoids the question. The developed side is compared in VEA vs IEFA vs SCHF, the one-fund route in VXUS vs IXUS, and how much to hold abroad in international ETFs for retirement.
Illustrative: a $40,000 emerging-markets slice (8% of a $500,000 portfolio), held for the year to Sep 30, 2026. Inputs: issuer expense ratios, country weights and 1-year NAV returns above.
| VWO | IEMG | |
|---|---|---|
| Yearly fund expenses | $40,000 × 0.06% = $24 | $40,000 × 0.09% = $36 |
| In South Korea | $0 | $40,000 × 20.58% = $8,232 |
| In China | $40,000 × 26.0% = $10,400 | $40,000 × 18.42% = $7,368 |
| 1-year gain | $40,000 × 12.54% = $5,016 | $40,000 × 26.84% = $10,736 |
The gap was $5,720 in one year, and the fee explains $12 of it. The rest came from Korea and China. The same index choice can work the other way: in 2022, VWO lost 18.0% and IEMG 20.0%. Pick the fund that fits the rest of your portfolio, not last year’s winner.
| Fund | Pros | Cons |
|---|---|---|
| VWO | Lowest fee of the two (0.06%); about 6,500 stocks across all sizes; fits FTSE funds (VEA, VXUS) with no overlap; smaller drawdowns in the data shown. | No South Korea, which hurt relative returns in the year to Sep 30, 2026; 26.0% in China; with an MSCI developed fund it leaves a Korea gap. |
| IEMG | Matches the widely used MSCI definition of emerging markets; includes Korea; fits MSCI EAFE funds such as IEFA; strong recent returns. | Higher fee (0.09%); more concentrated (top 10 = 34.24%); paired with VEA it doubles Korea; higher 5-year volatility (17.2%). |
Expense ratios and holdings from the issuers (Oct 22–23, 2026; SPEM and AVEM Sep 30, 2026):
| ETF | Expense ratio | Holdings | Note |
|---|---|---|---|
| SCHE (Schwab) | 0.06% | 2,232 | No South Korea in its country weights, like VWO |
| SPEM (State Street) | 0.07% | 2,725 | No South Korea in its country weights |
| EEM (iShares) | 0.72% | 1,184 | MSCI emerging markets, large and mid caps only; much higher fee |
| AVEM (Avantis) | 0.33% | 4,019 | Actively managed, tilts toward value and profitability; includes Korea |
| EMXC (iShares) | 0.25% | 607 | Emerging markets without China |
When it duplicates what you own or adds risk you would not hold through a crash. Counterexample: an investor with VXUS already owns emerging markets at market weight; adding IEMG on top overweights Korea and EM without a plan. Another: a retiree drawing income from the portfolio who would sell after a deep loss. VWO fell 67.7% peak to trough between Oct 9, 2007 and Mar 9, 2009, and 29.4% within 2022 (Exent market data). For money needed in the next few years, a bond or cash reserve does that job (SGOV vs BIL vs SHV).
VWO and IEMG were 14 points apart in a single year because of one country; emerging-markets results swing on the dollar, China and chips, and a fixed EM weight is easier to keep when those swings come with an explanation.
VWO tracks a FTSE index, and FTSE classifies South Korea as a developed market. Korean stocks sit in FTSE developed funds such as VEA instead. MSCI still classifies Korea as emerging, so IEMG held 20.58% there on Sep 30, 2026.
The account does not change the choice much; both pay modest dividends (2.05% and 2.21% over the 12 months to Sep 30, 2026). Pick the one that matches your developed-markets fund so Korea is neither missing nor doubled.
You can, but you would own South Korea twice: VEA held 9.2% in Korea and IEMG 20.58% (Sep 30, 2026). VEA pairs cleanly with VWO; IEFA pairs cleanly with IEMG.
Yes. VWO’s index covers large, mid and small companies, and IEMG’s investable-market index does too. EEM, the older iShares fund, holds only large and mid caps and charges 0.72%.
There is no single right number. At market weights, emerging markets are a small part of global stocks, and a total-international fund already includes them. Hypothetical illustrations often use 5–10% of stocks, not advice for everyone.
Mostly Korea and China. IEMG held about 21% in Korea, including Samsung Electronics and SK Hynix, and less in China, which fell: the MSCI China Index returned −18.23% in the year to Sep 30, 2026.
Both do, at partial weights. VWO’s index adjusts A-shares for foreign-investor quotas; MSCI includes large- and mid-cap A-shares at 20% of their free-float value.
Yes, 0.06% vs 0.09% a year, a difference of $30 per $100,000. Over the past year the index difference moved returns by more than 14 percentage points, so cost is not the deciding factor here.
Market intel provides a Risk ON / Neutral / Risk OFF reading from four pillars, cross-asset analysis, an events calendar and regular written notes. Context for reviewing a plan, not a crash forecast.
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.