🤝 BFF Take
VWO Wins — EEM's 0.68% Fee Is Extremely Difficult to Justify
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.
📋 Quick Takeaways
💰VWO costs 0.08% vs EEM's 0.68% — EEM costs over 8x more for similar emerging market exposure
🌏VWO excludes South Korea (classified as developed market); EEM includes Korea — this changes the composition
🎯EEM dominates the emerging market options market — only relevant if you trade options on EM
📊 Data-Based Take: VWO has the lower fee
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.
✓
Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
VWO
Vanguard FTSE Emerging Markets ETF
EEM
iShares MSCI Emerging Markets ETF
📋 VWO vs EEM — Key Facts Side by Side
| Metric |
VWO |
EEM |
| Fund Name |
Vanguard FTSE Emerging Markets ETF |
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% ✓ |
0.68% |
| Cost per $10K/yr |
$8.00 |
$68.00 |
| AUM |
$100B |
$20B |
| Holdings |
5,800 |
1,200 |
| Inception |
2005 |
2003 |
| 1-Year Return |
+8.20% |
+7.40% |
| 3-Year Return |
+2.40% |
+1.80% |
| 5-Year Return |
+5.10% |
+4.60% |
| Avg Bid-Ask Spread |
0.01% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 VWO vs EEM — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy VWO or EEM?
Choose if...
VWO
- You want the lowest fees — saves ~$60/yr per $10K vs EEM
- You want broader diversification (5,800 holdings vs 1,200)
Choose if...
EEM
- You already use iShares and prefer staying within their fund family
📧 Free Weekly Newsletter
Global ETF investing made simple — one concept a week
Currency risk, hedged vs unhedged, emerging vs developed — demystified in plain English.
✅ You're in! Check your inbox for your first issue.
❓ VWO vs EEM — Frequently Asked Questions
What is the difference between VWO and EEM?
VWO tracks the FTSE Emerging Markets index (~5,800 stocks) at 0.08%, while EEM tracks the MSCI Emerging Markets index (~1,200 stocks) at 0.68%. The most significant composition difference: VWO excludes South Korea (FTSE classifies it as developed), while EEM includes Korea (~13% weight). China, India, and Taiwan are top weights in both. The 60 basis point fee gap is the dominant difference for long-term investors.
Is EEM worth paying 0.68% vs VWO's 0.08%?
For almost all individual investors, no. EEM's high expense ratio is a historical artifact — it launched in 2003 when high fees were standard and has maintained its fee because institutional traders use it primarily for options. iShares even launched their own cheaper alternative (IEMG at 0.09%) to capture long-term investors. Over 20 years, EEM's fee drag can amount to tens of thousands of dollars on a large position.
What countries are in VWO and EEM?
Both hold major emerging markets: China (25-30%), India (18-22%), Taiwan (18-20%), Brazil (5-7%), Saudi Arabia (4-6%), and others. The main country difference is South Korea: EEM includes South Korea (about 12-13% of the portfolio); VWO excludes it because FTSE classifies Korea as a developed market. If you want specific Korea exposure without Korea being labeled EM, EEM has that niche advantage.
Have emerging markets been a good investment?
Emerging markets have underperformed US stocks significantly over the past decade. Strong US market returns combined with China's economic headwinds and EM currency weakness dragged returns. The case for EM exposure is diversification and potential future outperformance — EM countries represent ~40% of world GDP and tend to have younger populations and higher growth potential. But EM investing requires patience through periods of meaningful underperformance.
Is IEMG better than EEM?
For long-term investors, yes. IEMG (iShares Core MSCI Emerging Markets ETF) tracks a nearly identical MSCI index to EEM but charges only 0.09% vs EEM's 0.68%. It was launched specifically for individual investors. IEMG and VWO are both good alternatives to EEM. The main reason to continue holding EEM is if you have large embedded capital gains making the switch costly.
New to ETF investing? See answers to the most common ETF questions →
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.