Schwab Emerging Markets Equity ETF (SCHE +2.61%) offers broader diversification and lower cost, while iShares MSCI Emerging Markets ETF (EEM +3.20%) trades with higher volatility, a tech-heavy portfolio, and a much higher fee.
Both SCHE and EEM provide exposure to emerging market equities, but they differ in cost, sector weightings, and risk profile. This comparison looks at their expenses, performance, portfolio makeup, and trading characteristics to help investors decide which may better fit their approach to global diversification.
Snapshot (cost & size)
| Metric | SCHE | EEM |
|---|---|---|
| Issuer | Schwab | IShares |
| Expense ratio | 0.07% | 0.72% |
| 1-yr return (as of Mar. 24, 2026) | 15.3% | 26.2% |
| Dividend yield | 2.9% | 2.1% |
| Beta | 0.54 | 0.64 |
| AUM | $11.3 billion | $25.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
SCHE stands out as the more affordable option, charging just 0.07% annually compared to EEM’s 0.72%. SCHE also offers a higher dividend yield, which could appeal to income-focused investors seeking a larger payout from emerging markets exposure.
Performance & risk comparison
| Metric | SCHE | EEM |
|---|---|---|
| Max drawdown (5 y) | -33.76% | -37.82% |
| Growth of $1,000 over 5 years | $1,051 | $1,089 |
EEM has posted stronger five-year growth and a higher 1-year total return, but this has come with increased volatility and a steeper maximum drawdown compared to SCHE. Investors prioritizing risk management may notice that SCHE’s price swings have been somewhat milder.
What's inside
EEM tracks a large- and mid-cap emerging markets benchmark, holding 1,223 stocks with a pronounced tilt toward technology (34%) and financials (19%). Its top holdings include Taiwan Semiconductor Manufacturing (TSM +6.30%) at 12.51%, Samsung Electronics Ltd (SSU +10.67%) at 5.24%, and Tencent Holdings Ltd (TCEHY +0.76%) at 3.67%. The fund has a 23-year history, which may appeal to those valuing longevity and liquidity.
SCHE spreads its assets across a wider basket of 2,217 companies, with technology at 25%, cash and others at 23%, and financial services at 15%. The largest positions are Taiwan Semiconductor Manufacturing at 14.21%, Tencent Holdings Ltd at 4.21%, and Alibaba Group Holding Ltd (BABA +6.96%) at 2.92%. This broader diversification could help temper portfolio concentration risk compared to EEM’s tech-heavy approach.
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What this means for investors
Emerging markets stocks can provide key diversification to many investment portfolios. What’s more, emerging markets exchange-traded funds (ETFs) offer a smart way for investors to gain such exposure. Here’s how two of the most popular emerging markets ETFs stack up to one another.
First, there’s iShares MSCI Emerging Markets ETF (EEM), which is one of the oldest emerging markets ETFs, with more than 20 years of performance history. EEM has performed particularly well over the last year, generating a return of more than 26%. It also has the edge on AUM, with $25.4 billion in AUM, making it quite easy for investors to buy and sell shares.
Schwab Emerging Markets Equity ETF (SCHE) hasn’t been around as long as EEM, but its 16-year performance history is still impressive. Its largest advantage over EEM is its 0.07% expense ratio, which is significantly less than EEM’s 0.72% expense ratio. In addition, SCHE has a higher dividend yield of 2.9% vs. 2.1% for EEM.
In summary, both ETFs offer investors solid exposure to emerging markets stocks. However, cost-conscious or income-focused investors will likely favor SCHE for its lower fees and higher dividend yield. Meanwhile, those focused solely on performance may select EEM.
