Key Points

Vanguard FTSE Emerging Markets ETF delivers markedly reduced expenses via a 0.06% expense ratio versus 0.72% for iShares MSCI Emerging Markets ETF.
iShares MSCI Emerging Markets ETF carries greater technology sector exposure compared to Vanguard FTSE Emerging Markets ETF.
Vanguard FTSE Emerging Markets ETF features substantially higher assets under management along with an elevated dividend yield.
10 stocks we like better than Vanguard FTSE Emerging Markets ETF ›

Vanguard FTSE Emerging Markets ETF (NYSEMKT:VWO) delivers a markedly reduced expense ratio and elevated dividend yield relative to iShares MSCI Emerging Markets ETF (NYSEMKT:EEM), which features greater technology sector exposure.

Both funds grant access to developing economies yet track distinct index providers. The iShares fund follows the MSCI Emerging Markets Index while the Vanguard fund adheres to the FTSE Emerging Markets All Cap China A Inclusion Index, producing notable variances in fees, risk characteristics, and country allocations.

Snapshot (cost and size)

Metric	EEM	VWO
Issuer	iShares	Vanguard
Expense ratio	0.72%	0.06%
1-yr return (as of June 3, 2026)	55.80%	30.70%
Dividend yield	1.80%	2.80%
Beta	0.72	0.59
AUM	$31.2 billion	$159.9 billion

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The fee gap proves substantial. The Vanguard fund proves far more economical at a 0.06% expense ratio while the iShares fund levies 0.72%. In addition the Vanguard fund supplies a larger distribution for income-focused investors.

Performance and risk comparison

Metric	EEM	VWO
Max drawdown (5 yr)	(37.70%)	(32.60%)
Growth of $1,000 over 5 years (total return)	$1,403	$1,287

What is inside

Vanguard FTSE Emerging Markets ETF (NYSEMKT:VWO) encompasses 5,942 holdings and debuted in 2005. Its portfolio emphasizes technology at 30%, financial services at 20%, and consumer cyclical at 11%. Leading positions feature Taiwan Semiconductor Manufacturing (TWSE:2330) at 14.09%, Tencent (HKG:0700) at 3.14%, and Alibaba Group (HKG:9988) at 2.46%. Over the trailing 12 months the fund distributed $1.71 per share in dividends.

By comparison iShares MSCI Emerging Markets ETF (NYSEMKT:EEM) launched in 2003 and holds 1,232 positions. Its sector allocation leans heavily toward technology at 44%, followed by financial services at 18% and consumer cyclical at 8%. Primary holdings include Taiwan Semiconductor Manufacturing Co. (TWSE:2330) at 14.74%, Samsung Electronics (KRX:005930) at 8.62%, and SK Hynix (KRX:000660) at 6.66%. It distributed a trailing-12-month dividend of $1.21 per share.

What this means for investors

With younger populations, faster-growing economies, and an expanding middle class across Asia, Latin America, and Africa, emerging markets present compelling prospects for long-term investors. That growth potential arrives alongside genuine complexity. These popular emerging markets funds even differ on which nations qualify as emerging.

Most notable is a classification nuance concerning South Korea. EEM incorporates South Korea since MSCI labels it an emerging market, which accounts for Samsung ranking among its top holdings. VWO omits South Korea completely because FTSE views it as developed, so Samsung does not appear in this fund. This difference helps explain EEMs elevated technology weighting and its stronger recent performance.

Yet EEM levies a striking 10 times the fee of VWO. That equates to roughly $65 extra annually on a $10,000 investment, and across two decades of compounding it creates a significant drag on returns. VWO's substantially lower cost, higher yield, and wider diversification across roughly 6,000 holdings position it as the superior long-term core for most buy-and-hold investors. Tactical traders and those seeking specific exposure to South Korea's technology firms within their emerging markets allocation will locate what they require in EEM.

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Sara Appino has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing and Vanguard FTSE Emerging Markets ETF. 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.