AVEM vs IEMG

Key Takeaways

• AVEM is an actively managed, rules-based multi-factor fund holding roughly 3,900 stocks with a 0.33% expense ratio, while IEMG is a passive, market-cap-weighted index fund with about 2,800 holdings and a 0.09% expense ratio.
• Both funds are heavily tilted toward Asian technology, with Taiwan, China, South Korea, and India driving the majority of country exposure.
• IEMG is more concentrated at the top — Taiwan Semiconductor Manufacturing represents roughly 12%–14% of the fund — whereas AVEM's largest position is closer to 6%–7%.
• IEMG offers materially greater scale and liquidity with more than $150 billion in assets under management (AUM), while AVEM's factor tilts emphasize value and profitability across all market capitalizations.
• Cost is IEMG's structural advantage (0.09% versus 0.33%), while AVEM's smaller-cap and profitability tilt is designed to pursue higher expected long-term returns.
• Tickeron AI Verdict: IEMG.

Introduction

Emerging-market equities have re-emerged as a focal point for investors seeking diversification, valuation discounts relative to U.S. equities, and exposure to the artificial-intelligence-driven semiconductor supply chain concentrated in Taiwan and South Korea. AVEM and IEMG are two of the most prominent ways to access this asset class, but they pursue that goal through fundamentally different structures. AVEM is an actively managed, factor-oriented strategy, while IEMG is a low-cost, passive benchmark vehicle. Comparing them side by side helps investors weigh cost efficiency, diversification breadth, factor tilts, and liquidity when deciding how to position emerging-market exposure.

Avantis Emerging Markets Equity ETF (AVEM) Overview

AVEM, the Avantis Emerging Markets Equity ETF, is an actively managed fund that invests across emerging-market equities of all market capitalizations, targeting companies the managers consider attractive on multiple dimensions, including value and profitability. Under normal conditions it invests at least 80% of assets in emerging-market-related equities. The fund holds roughly 3,900 stocks, spreading concentration broadly — its largest position, Taiwan Semiconductor Manufacturing (combining the local listing and the U.S.-listed TSM American Depositary Receipt, or ADR), accounts for roughly 6%–7% of assets. Other top holdings include Samsung Electronics, SK Hynix, Tencent Holdings, MediaTek, BABA (Alibaba Group), and China Construction Bank.

Sector allocation is led by information technology at roughly 28%–38% of the portfolio, followed by financials near 20%–22%, consumer discretionary, industrials, and materials. Geographically, Taiwan, China, South Korea, and India together represent the bulk of exposure. The expense ratio is 0.33%, reflecting the cost of active factor-based management, and the fund launched in September 2019. AVEM's distinguishing feature is its systematic tilt toward smaller companies and higher-profitability, lower-valuation stocks rather than pure market-cap weighting.

iShares Core MSCI Emerging Markets ETF (IEMG) Overview

IEMG, the iShares Core MSCI Emerging Markets ETF, is a passive index fund that seeks to track the MSCI Emerging Markets Investable Market Index, a broad benchmark spanning large-, mid-, and small-cap companies and covering roughly 99% of emerging-market free-float market capitalization. The fund holds approximately 2,800 stocks and is one of the largest and most liquid emerging-market ETFs, with more than $150 billion in AUM and an expense ratio of just 0.09%.

IEMG's top holdings are dominated by Asian technology and financial names. Taiwan Semiconductor Manufacturing is the largest position at roughly 12%–14% of assets, followed by Samsung Electronics, SK Hynix, Tencent Holdings, Alibaba Group, MediaTek, Delta Electronics, China Construction Bank, HDFC Bank, and Hon Hai Precision. Sector exposure is led by information technology, which has climbed toward 25%–40% of the portfolio in recent cycles, followed by financials near 18%–19% and consumer discretionary. Country allocations are led by Taiwan, China, South Korea, and India. As a market-cap-weighted index fund, IEMG provides low-cost, transparent beta to the broad emerging-market universe without active factor tilts.

Industry and Thematic Backdrop

Both funds are heavily influenced by the same macro and thematic forces shaping emerging markets. The artificial-intelligence buildout has concentrated investor attention on the semiconductor and memory-chip leaders of Taiwan and South Korea — companies such as TSMC, Samsung Electronics, and SK Hynix — which now dominate the top of both portfolios. This has pushed technology weightings to historically elevated levels and increased sensitivity to the global AI capital-expenditure cycle. At the same time, emerging markets continue to trade at a meaningful valuation discount to developed-market equities, and investor capital flows into international and emerging-market funds have strengthened in recent market cycles. Key risks include U.S. dollar strength, interest-rate expectations, China's uneven economic recovery, geopolitical tensions, and concentration risk in the technology sector.

Performance and Positioning Comparison

In recent weeks and months, both AVEM and IEMG have been shaped by the same drivers — chiefly the strength of Taiwanese and South Korean semiconductor names and a broader rotation toward cheaper international equities. IEMG's higher concentration in its largest technology holdings has amplified both its upside participation and its relative volatility during periods of strong sector momentum. AVEM, with its more diversified top-10 exposure and tilt toward smaller-cap and value-oriented names, has tended to exhibit a slightly different risk and return profile, with less single-stock concentration risk but also less direct exposure to the largest momentum leaders. In relative positioning terms, IEMG functions as pure, low-cost market beta, while AVEM introduces factor diversification that can lag in momentum-driven markets but may offer resilience when leadership broadens.

AI Screener

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Tickeron AI Verdict

Based on observable structural factors, Tickeron's AI would currently favor IEMG. Its materially lower expense ratio (0.09% versus 0.33%), vastly larger AUM and trading liquidity, and broad coverage of roughly 99% of emerging-market capitalization provide a stronger foundation for cost efficiency and execution. Its heavier weighting toward the highest-momentum technology leaders aligns more directly with the prevailing semiconductor and AI-driven sector trend, supporting trend consistency. While AVEM's value and profitability tilt offers a defensible diversification thesis, the AI's assessment weighs IEMG's combination of low cost, scale, liquidity, and alignment with current sector momentum as the more favorable relative profile in this environment. This is not a prediction of future returns and is not investment advice.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

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