IEMG vs XLF: Correlation & Overlap
iShares Core MSCI Emerging Markets ETF (IEMG) and Financial Select Sector SPDR Fund (XLF) show a moderate relationship: their 3-year correlation of weekly returns is 0.38. By holdings, the two funds overlap 0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IEMG and XLF?
Over the past 3 years, IEMG and XLF moved with a correlation of 0.38, which is moderate. The link has loosened recently: the 1-year correlation (0.22) runs below the 3-year figure (0.38). Over 5 years the correlation is 0.47, and the annualized covariance of weekly returns is 107.7 %².
Within IEMG's tracked universe of 68 assets, XLF comes in at #53 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months IEMG outperformed by 26.7 percentage points (+36.0% for IEMG against +9.3% for XLF). This link changes with the market regime, having swung between 0.13 and 0.67 on a rolling one-year basis.
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.
IEMG vs XLF: side by side
| IEMG (iShares Core MSCI Emerging Markets ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +36.0% | +9.3% |
| 5-year return | +50.7% | +64.2% |
| Volatility (ann.) | 17.4% | 16.2% |
| Beta vs S&P 500 | 0.84 | 0.84 |
| Max drawdown (3Y) | -17.2% | -15.5% |
| Dividend yield | 2.31% | 1.42% |
| Expense ratio | 0.09% | 0.08% |
| Assets under management | $152.2B | $57.9B |
| Sector / category | ETF · International | Sector ETF |
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. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between IEMG and XLF
The two portfolios are largely distinct. Weighing the shared positions, 0% of the two funds is identical, spread across 0 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by IEMG: 2330 (13.28%), 005930 (6.27%), 000660 (4.78%), 700 (2.49%), 9988 (1.77%). Only by XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26.
Year-by-year returns
| Year | IEMG | XLF |
|---|---|---|
| 2022 | -20.0% | -10.6% |
| 2023 | +11.5% | +12.0% |
| 2024 | +6.5% | +30.6% |
| 2025 | +32.6% | +14.9% |
| 2026 | +23.6% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IEMG and XLF good diversifiers for each other?
A fair diversifier. At 0.38, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
FAQ
What is the correlation between IEMG and XLF?
The IEMG/XLF correlation stands at 0.38 on a 3-year window (1 year: 0.22, 5 years: 0.47), computed from weekly returns as of 2026-08-27.
Is XLF a good diversifier for IEMG?
A fair diversifier. At 0.38, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
How much do IEMG and XLF overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
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Related comparisons
Hubs: IEMG correlations · XLF correlations
