“The $33 billion iShares MSCI Emerging Markets Index Fund (EEM) isn’t the biggest ETF. But because its exotic investing strategy has seemed to justify hefty fees for investors, it’s thought to be one the most, if not the most, lucrative: It generates about $240 million in revenue from fund holders’ annual fees, roughly $100 million more than any other ETF,” Ian Salisbury Reports From The WSJ.

“Investors’ reaction to an almost identical but much less expensive offering – the $13 billion Vanguard Emerging Markets Stock ETF (VWO) – suggests that remarkable position may be getting hard to maintain. With emerging markets stocks snapping back from last winter’s lows, both competing funds have seen investors pour in new money in 2009. But the smaller Vanguard fund has captured a much bigger share of the pie – about $5 billion compared to $2 billion for its larger, more-established rival,” Salisbury Reports.

“The clock is ticking on the iShares fund,” says Morningstar analyst Scott Burns, who recently predicted that Barclays PLC (BCS), which owns iShares, would cut fees to make its offering more competitive. “Barclays says it has no plans to change what the fund charges. The fund still has one big advantage, namely, lower trading costs, which can matter more than annual fees for some short-term investors like hedge funds,” Salisbury Reports.

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Here’s a closer look at both ETF’s below:

The investment (EEM) seeks investment results that correspond generally to the price and yield performance of the MSCI Emerging Markets index. The fund generally invests at least 90% of assets in the securities of its underlying index or in ADRs and GDRs representing such securities. The index was developed by MSCI as an equity benchmark for international stock performance. It is nondiversified.

The investment (VWO) seeks to track the performance of the MSCI Emerging Markets index. The fund employs a passively managed investment approach by investing all or substantially all of assets in a representative sample of the common stocks included in the MSCI Emerging Markets index. This index includes approximately 781 common stocks of companies located in emerging markets around the world.

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ETF BASIC NEWS, NYSE:EEM, VWO