EFA vs IEMG: Correlation & Overlap
How closely do iShares MSCI EAFE ETF (EFA) and iShares Core MSCI Emerging Markets ETF (IEMG) trade together? Their weekly returns over three years give a correlation of 0.79, which is strong. The two funds also share 0.4% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are EFA and IEMG?
Across a 3-year window, the weekly returns of EFA and IEMG correlate at 0.79, strong. Recent behaviour matches the longer record: 0.81 over 1 year against 0.79 over 3. Stretching to 5 years gives 0.80, with an annualized covariance of 206.8 %².
Among the 109 assets we track against EFA, IEMG ranks #16 by 3-year correlation. Over the last 12 months IEMG came out ahead by 14.1 percentage points (+21.9% against +36.0%). The rolling one-year correlation stayed in a tight band between 0.73 and 0.88 over the past three years, which points to a structural rather than episodic relationship.
How is this computed?
Pearson correlation on weekly returns: ρ(A,B) = cov(rA, rB) / (σA · σB), over windows of 52, 156 and 260 weeks. Covariance is annualized (×52) and expressed in %². Full definitions on the methodology page.
EFA vs IEMG: side by side
| EFA (iShares MSCI EAFE ETF) | IEMG (iShares Core MSCI Emerging Markets ETF) | |
|---|---|---|
| 1-year return | +21.9% | +36.0% |
| 5-year return | +56.7% | +50.7% |
| Volatility (ann.) | 14.9% | 17.4% |
| Beta vs S&P 500 | 0.77 | 0.84 |
| Max drawdown (3Y) | -14.1% | -17.2% |
| Dividend yield | 3.19% | 2.31% |
| Expense ratio | 0.32% | 0.09% |
| Assets under management | $78.0B | $152.2B |
| Sector / category | ETF · International | ETF · International |
EFA, iShares's Foreign Large Blend fund, carries $78.0B under management, 666 holdings, a 0.32% expense ratio, a 3.19% trailing dividend yield. IEMG, iShares's Diversified Emerging Mkts fund, carries $152.2B under management, 1824 holdings, a 0.09% expense ratio, a 2.31% trailing dividend yield.
Portfolio overlap between EFA and IEMG
The two portfolios are largely distinct, with 14 holdings in common adding up to 0.4% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in EFA | Weight in IEMG |
|---|---|---|
| DSY | 0.08% | 0.06% |
| 1801 | 0.05% | 0.14% |
| SOL | 0.05% | 0.05% |
| VOD | 0.13% | 0.04% |
| 2801 | 0.03% | 0.04% |
| 1605 | 0.09% | 0.03% |
| 7203 | 0.81% | 0.03% |
| 4004 | 0.08% | 0.01% |
| TEL | 0.04% | 0.01% |
| SGP | 0.03% | 0.01% |
| 1802 | 0.05% | 0.01% |
| AC | 0.05% | 0.01% |
| 6098 | 0.63% | 0.01% |
| 7202 | 0.03% | 0.01% |
Largest positions held only by EFA: ASML (2.99%), HSBA (1.57%), ROP (1.42%), SAN (1.38%), NOVN (1.28%). Only by IEMG: 2330 (13.28%), 005930 (6.27%), 000660 (4.78%), 700 (2.49%), 9988 (1.77%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 14 common positions shown.
Year-by-year returns
| Year | EFA | IEMG |
|---|---|---|
| 2022 | -14.4% | -20.0% |
| 2023 | +18.4% | +11.5% |
| 2024 | +3.5% | +6.5% |
| 2025 | +31.5% | +32.6% |
| 2026 | +14.3% | +23.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EFA and IEMG good diversifiers for each other?
Somewhat, no more. With 0.79 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between EFA and IEMG?
As of 2026-08-27, the correlation of weekly returns between EFA and IEMG is 0.79 over 3 years, 0.81 over 1 year and 0.80 over 5 years.
Is IEMG a good diversifier for EFA?
Somewhat, no more. With 0.79 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do EFA and IEMG overlap?
The two funds share 14 holdings amounting to 0.4% of weight, per issuer portfolio files dated 2026-08-26.
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Related comparisons
Hubs: EFA correlations · IEMG correlations
