Sorry I misread the question, updated my answers below.
EEM(iShares): follows MSCI index.
VWO (Vangaurd): follows FTSE EM all cap index
A comparison table for easy reference:
EEM was one of the earliest EM-focused ETF and debuted in 2003 with its reasonably attractive fees then. However, lower costs player started to enter the market, building AUM size and consequently lowering expense ratios.
However, EEM remained attractive due to:
- Very liquid (tight bid-ask). $60m daily trading volume or 4x of VWO. This is despite EEM having half the share outstanding versus VWO.
- Concentrated (high Beta). EEM is also more concentrated with top 10 holdings at 24% versus VWO's 20.4%. Easier for investors to make focused bet rather than a large diversified basket.
- Represents EM risk/rewards despite smaller AUM and less holdings ($33b vs. VWO' $63b). It helps liquidity too as it focuses mainly mid to large caps whereas VWO is all caps because its so big and needs to buy across more stock holdings to spread out weightage).
- MSCI more widely followed index, also more balanced. For example MSCI EM has South Korea, but VWO does not. Many derivatives are hence built upon EEM which further supports people's willingness to buy and hence the expense ratio.
Over time, Blackrock/iShares acknowledged that it is losing AUM and fees to competitors and came up with an alternative, the IEMG etf which sports a 0.14% expense fee. Its now about $61b, similar to VWO.
Theres a recent Bloomberg article that talks about EEM in general. Even EEM has a much higher expense ratio than other iShares ETFs of significantly larger size.
Lastly, people should note that because EEM tracks MSCI EM, its weightage to China will increase further as MSCI is adding China A-shares exposure.
Conclusion: EEM has higher expense ratio by legacy. However because of its popularity, it maintains the high ratio (continues to milk it) and introduced a more cost effective alternative to maintain its hold on AUM (and fees, albeit much lower than EEM), away from low cost providers like VWO. Over time, investors are likely to continue to gravitate towards VWO/IEMG etfs and EEM would last so as long there are investors who would like a more nimble option with derivatives.