DFEM vs EEM: Which ETF Is Better in 2026?
A metric-by-metric comparison of Dimensional Emerging Markets Core Equity 2 ETF (DFEM) and iShares MSCI Emerging Markets ETF (EEM) — both Emerging Markets funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
DFEM and EEM are close to the same fund wearing different labels. Both sit in the Emerging Markets category and their daily returns move almost identically, so this is not really a question of which fund is better — it is a question of which one is cheaper to own and easier to trade in your account. Everything below is about finding the small, structural edges, because the investment exposure is a wash.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — EEM scores higher: 68.8 (Grade B) versus 66.2 for DFEM. That doesn't make DFEM a bad fund; it means EEM currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| DFEM | EEM | |
|---|---|---|
| Category | Emerging Markets | Emerging Markets |
| Expense ratio | 0.39% | 0.72% |
| Fund size (AUM) | $9.3B | $30.3B |
| Dividend yield | 1.85% | 1.18% |
| 1-year return | +25.51% | +29.32% |
| 3-year return | +59.73% | +62.14% |
| Volatility | 22.02% | 23.97% |
| Max drawdown | -18.09% | -17.29% |
| Sharpe ratio | 0.93 | 1.01 |
| ETFValuer score | 66.2 | 68.8 |
| Grade | B | B |
| Overall rank | #160 | #128 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
DFEM is the cheaper fund, charging 0.39% a year versus 0.72% for EEM — a gap of 0.33 percentage points (about $33.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. Since these two deliver almost the same exposure, that fee gap is close to the entire difference between them — it comes straight out of your return with nothing offered in exchange. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What EEM's Fees Cost You
EEM charges an expense ratio of 0.72% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, EEM returned +62.14% versus +59.73% for DFEM — a gap of about 2.4 percentage points. On risk, EEM has held up better historically, with a shallower max drawdown (-17.29% vs. -18.09%). EEM currently has the better risk-adjusted return (Sharpe ratio of 1.01 vs. 0.93), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), DFEM and EEM show a extremely high correlation of 0.988 — very close substitutes. Holding both would add very little diversification: when one falls, the other almost always falls with it. Treat these as alternatives to each other, not as complements in the same portfolio.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.988 | Extremely high — very close substitutes |
| R-squared | 97.6% | 97.6% of DFEM's daily moves are explained by EEM's |
| Tracking error (annualised) | 3.26% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | DFEM +17.70% · EEM +18.27% | EEM ahead by 0.56 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, DFEM finished as much as +3.9 points ahead of EEM at the best extreme and -5.8 points at the worst — a 9.7-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
DFEM and EEM hold 6 of the same companies among their top 10 positions. Those shared names make up 19.8% of DFEM and 29.8% of EEM. That's meaningful duplication. The funds aren't interchangeable, but a good share of your money would be riding on the same companies twice.
| Shared Holding | DFEM Weight | EEM Weight |
|---|---|---|
| Taiwan Semiconductor Manufacturing Company Limited | 9.23% | 13.14% |
| Samsung Electronics Co., Ltd. | 3.72% | 6.07% |
| SK hynix Inc. | 3.20% | 3.45% |
| Tencent Holdings Limited | 1.95% | 3.61% |
| Alibaba Group Holding Limited | 0.95% | 2.66% |
| CHINA CONSTRUCTION BANK CORPORATION | 0.75% | 0.84% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean DFEM if…
- You want the lower running cost — 0.39% vs 0.72%, about $33 a year less on a $10,000 position
- Current income matters to you — it yields 1.85% against 1.18%
Lean EEM if…
- You weight recent results heavily — it returned 62.1% over 3 years against 59.7%
- You want the deeper, more liquid market ($30B in assets vs $9B)
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is DFEM or EEM better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — EEM scores higher: 68.8 (Grade B) versus 66.2 for DFEM. That doesn't make DFEM a bad fund; it means EEM currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, DFEM or EEM?
DFEM currently has the lower expense ratio (0.39% vs. 0.72%).
Can I hold both DFEM and EEM?
You can, but there's little point. DFEM and EEM have a daily return correlation of 0.99 over the past 3.0 years, meaning they move almost in lockstep. Holding both roughly doubles a single bet rather than spreading it — pick whichever wins on cost and liquidity and put the money in one place.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.