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.
📋 VWO vs EEM — Key Facts Side by Side
| Metric | VWO | EEM |
|---|---|---|
| Fund Name | Vanguard Emerging Markets Stock Index Fund | 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 | $163.3B | $30.3B |
| Holdings | 5,800 | 1,200 |
| Inception | 2005 | 2003 |
| 1-Year Return | +20.62% | +38.42% |
| 3-Year Return | +17.33% | +22.12% |
| 5-Year Return | +5.73% | +7.01% |
| Dividend Yield | 2.32% | 1.63% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.01% | 0.01% |
Expense ratio, AUM, and returns updated Jul 14, 2026 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.
🎯 Which Fund Fits Which Investor?
- want the lowest fees: saves ~$60/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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❓ VWO vs EEM — Frequently Asked Questions
New to ETF investing? See answers to the most common ETF questions →