IEFA vs IEMG: Correlation & Overlap
iShares Core MSCI EAFE ETF (IEFA) and iShares Core MSCI Emerging Markets ETF (IEMG) show a very strong relationship: their 3-year correlation of weekly returns is 0.80. The two funds also share 0.6% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IEFA and IEMG?
Across a 3-year window, the weekly returns of IEFA and IEMG correlate at 0.80, very strong, meaning they move nearly in lockstep. Recent behaviour matches the longer record: 0.81 over 1 year against 0.80 over 3. Stretching to 5 years gives 0.80, with an annualized covariance of 208.1 %².
By 3-year correlation, IEMG places #15 of the 111 assets tracked against IEFA. The trailing year gives IEMG the advantage: +21.8% versus +36.0%, a 14.2-point spread. 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.
IEFA vs IEMG: side by side
| IEFA (iShares Core MSCI EAFE ETF) | IEMG (iShares Core MSCI Emerging Markets ETF) | |
|---|---|---|
| 1-year return | +21.8% | +36.0% |
| 5-year return | +54.5% | +50.7% |
| Volatility (ann.) | 15.0% | 17.4% |
| Beta vs S&P 500 | 0.77 | 0.84 |
| Max drawdown (3Y) | -13.8% | -17.2% |
| Dividend yield | 3.35% | 2.31% |
| Expense ratio | 0.07% | 0.09% |
| Assets under management | $190.1B | $152.2B |
| Sector / category | ETF · International | ETF · International |
On the fund side, IEFA sits in the Foreign Large Blend category at iShares, with $190.1B under management, 1620 holdings, a 0.07% expense ratio, a 3.35% 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 IEFA and IEMG
The two portfolios are largely distinct, with 34 holdings in common adding up to 0.6% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in IEFA | Weight in IEMG |
|---|---|---|
| DSY | 0.07% | 0.06% |
| SOL | 0.05% | 0.05% |
| 1801 | 0.04% | 0.14% |
| VOD | 0.11% | 0.04% |
| 2801 | 0.03% | 0.04% |
| 7203 | 0.69% | 0.03% |
| 2269 | 0.03% | 0.16% |
| 1605 | 0.08% | 0.03% |
| 6869 | 0.02% | 0.06% |
| DIA | 0.01% | 0.01% |
| SGP | 0.03% | 0.01% |
| 3563 | 0.03% | 0.01% |
| 2327 | 0.01% | 0.19% |
| 2331 | 0.01% | 0.03% |
| AC | 0.04% | 0.01% |
Largest positions held only by IEFA: ASML (2.57%), HSBA (1.35%), ROP (1.22%), SAN (1.17%), NOVN (1.10%). 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 15 common positions shown.
Year-by-year returns
| Year | IEFA | IEMG |
|---|---|---|
| 2022 | -15.2% | -20.0% |
| 2023 | +18.0% | +11.5% |
| 2024 | +3.3% | +6.5% |
| 2025 | +32.1% | +32.6% |
| 2026 | +14.5% | +23.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IEFA and IEMG good diversifiers for each other?
No. With a correlation of 0.80, IEFA and IEMG move nearly in lockstep, so holding both adds very little diversification.
FAQ
What is the correlation between IEFA and IEMG?
The IEFA/IEMG correlation stands at 0.80 on a 3-year window (1 year: 0.81, 5 years: 0.80), computed from weekly returns as of 2026-08-27.
Is IEMG a good diversifier for IEFA?
No. With a correlation of 0.80, IEFA and IEMG move nearly in lockstep, so holding both adds very little diversification.
How much do IEFA and IEMG overlap?
0.6% by weight, across 34 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Related comparisons
Hubs: IEFA correlations · IEMG correlations
