VWO vs EEM: The Emerging Markets Cost War — 0.08% vs 0.68%
VWO and EEM both invest in emerging market stocks. The performance is similar. The fee difference is enormous. For long-term investors, VWO is the clear choice.
VWO (Vanguard FTSE Emerging Markets ETF) and EEM (iShares MSCI Emerging Markets ETF) both invest in developing economies — China, India, Taiwan, Brazil, South Korea, and others. VWO charges 0.08%; EEM charges 0.68%. That 60 basis point gap is massive by modern ETF standards. On a $100K emerging markets allocation over 20 years, you'd pay roughly $15,000 more in fees with EEM than VWO. EEM's only advantages: much higher options market liquidity (it's the dominant EM options vehicle) and inclusion in Korea (VWO excludes South Korea, classifying it as a developed market). For options traders or Korea-specific needs, EEM has a niche role. For everyone else, VWO or IEMG (iShares at 0.09%) are clearly better.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 VWO vs EEM: Key Facts Side by Side
| Metric | VWO | EEM |
|---|---|---|
| Fund Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | iShares MSCI Emerging Markets ETF |
| Issuer | Vanguard | iShares |
| Tracks Index | FTSE Emerging Markets All Cap China A Inclusion | MSCI Emerging Markets |
| Expense Ratio | 0.08% ✓ | 0.72% |
| Cost per $10K/yr | $8.00 | $72.00 |
| AUM | $164.7B | $31.1B |
| Holdings | 5,800 | 1,200 |
| Inception | 2005 | 2003 |
| 1-Year Return | +9.94% | +22.86% |
| 3-Year Return | +18.37% | +23.20% |
| 5-Year Return | +6.52% | +8.09% |
| Dividend Yield | 2.05% | 1.67% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.01% | 0.01% |
AUM and returns updated Oct 14, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 VWO vs EEM: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- want the lowest fees: saves ~$64/yr per $10K vs EEM
- want broader diversification (5,800 holdings vs 1,200)
- already use iShares and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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