ETF Face-Off: EEM vs. VWO

With over 1,000 ETFs now making up the universe, there is bound to be some redundancy.

If you cut down this large ETF pile and select only those with high average daily volume figures, which I define over $10 million, you end up with less than 100. Even in that much smaller pile there are duplications, which are necessary for healthy competition.

With all things being (almost) equal, how do you then make your selections?

Let’s take a look at 2 ETFs, which are the heavyweights in the Emerging Markets arena, namely EEM and VWO. Here’s a little matrix I use to make a quick comparison, after having looked at the momentum numbers and rankings, to see which ETF might be the better choice:

[Click on table to enlarge]

Years ago, EEM used to have higher net assets, but that has changed as VWO has raced ahead. Strangely enough, EEM’s daily volume exceeds their total assets, while VWO sports a volume sufficient for almost any investor.

The bid/ask spread is identical, the annual yield favors VWO and on the performance side, the differences are fairly small.

In this case, it comes down to the annual expenses where VWO is the clear winner with less than 1/3 of what EEM is charging. That’s why VWO is the preferred choice in my advisor practice.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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