FM vs VWO: Head-to-Head Comparison

Side-by-Side Comparison

Key Differences Between FM and VWO

FM (iShares MSCI Frontier and Select EM ETF) is a frontier markets fund managed by BlackRock. FM provides exposure to frontier and small emerging market countries that are too small or underdeveloped to be included in standard emerging market indices. It holds stocks from markets like Vietnam, Nigeria, Kazakhstan, and Bangladesh. This fund offers investors access to some of the world's youngest and fastest-urbanizing economies that are in the earliest stages of capital market development.

VWO (Vanguard FTSE Emerging Markets ETF) is a emerging markets fund managed by Vanguard. VWO gives investors access to stocks in emerging economies such as China, India, Brazil, Taiwan, and South Africa. These countries have younger populations and faster economic growth potential than developed nations. Beginners should know that emerging markets can be more volatile than developed markets, but VWO offers this higher-growth exposure at a very low cost of 0.08%.

The most notable differences are in fees (0.79% vs 0.08%), number of holdings (150 vs 5,830), and 5-year returns (3.00% vs 3.20%).

Holdings Overlap Analysis

FM and VWO share only 0% of their top holdings. These funds are quite different, making them complementary choices if you want broader market coverage.

Cost Comparison Over Time

If you invest $10,000 and hold for 20 years (assuming 8% annual returns):

Over 20 years, the fee difference amounts to $5,679 on a $10,000 investment. VWO saves you more in fees over time.

Which One Should a Beginner Choose?

Choose FM if: You want adventurous investors seeking the highest diversification benefit from truly uncorrelated markets, those with a very long time horizon who want exposure to the next generation of emerging economies, portfolio allocators looking to add frontier market exposure beyond standard em indices. It's managed by BlackRock with an expense ratio of 0.79%.

Choose VWO if: You want long-term investors who want exposure to the world's fastest-growing economies, those building a globally diversified portfolio who want to pair vwo with vea for full international coverage, contrarian investors who believe emerging markets are undervalued relative to u.s. stocks. It's managed by Vanguard with an expense ratio of 0.08%.

Can You Own Both FM and VWO?

Absolutely! With only 0% overlap, FM and VWO complement each other well. A simple portfolio might allocate 60% to one and 40% to the other, or you could pair them with a bond ETF like BND for a complete three-fund portfolio.

Frequently Asked Questions