These Global ETFs Offer International Exposure but One Spans Further

Both the SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) and Vanguard Total International Stock ETF (NASDAQ:VXUS) are core international funds designed for broad exposure outside the United States, but their coverage differs: SPDW tracks only developed markets, whereas VXUS includes both developed and emerging economies. This comparison highlights how these differences play out in terms of costs, returns, risk, and portfolio construction.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

SPDW has a slightly lower expense ratio and a higher dividend yield. However, it pays dividends semi-annually, whereas VXUS pays quarterly.

Performance & risk comparison

What's inside

SPDW tracks developed markets outside the U.S. and holds 2,413 stocks, with a sector tilt toward financials, industrials, and consumer cyclical. Its top holdings include ASML Holding N.V. (AMS:ASML), Samsung Electronics (LON: SMSN), and Roche Holding AG (SWX:ROG).

Although it has a similar sector allocation, VXUS is far broader, covering both developed and emerging markets across 8,673 holdings. Top positions include Taiwan Semiconductor Manufacturing Company Ltd. (2330.TW), Tencent Holdings Ltd. (0700.HK), and ASML Holding N.V. (AMS:ASML).

What this means for investors

Investors should be aware that international stocks in ETFs like those mentioned can move very differently from U.S. stocks and exhibit price movement that U.S. investors may not be accustomed to. Foreign stocks may move more closely in line with the relevant country’s economic and political structures and events, which could add or decrease volatility to both ETFs compared to domestic funds.

Four of the top five holdings in SPDW are European companies, with all assets having less than 2% weight. In VXUS, four of its top five holdings are Asian, with TSMC as the only stock with a weight over 2%. U.S. investors may want to keep an eye on relevant events in the relevant foreign country or continent to better understand the international stocks associated with each ETF.

Regardless, for a stronger international tech exposure, VXUS may be the better option, but for a more balanced focus, SPDW has the edge.

Glossary

ETF: Exchange-traded fund that holds a basket of securities and trades on an exchange like a stock.
Expense ratio: Annual fund fee, expressed as a percentage of assets, covering management and operating costs.
Dividend yield: Annual dividends paid by a fund divided by its current share price, shown as a percentage.
Developed markets: Economies considered mature, stable, and highly industrialized, such as Japan, the U.K., and Western Europe.
Emerging markets: Developing countries with faster growth potential but generally higher economic and political risk.
AUM (Assets under management): Total market value of all assets a fund or manager oversees for investors.
Beta: Measure of a fund’s volatility relative to a benchmark index, typically the S&P 500.
Max drawdown: Largest peak-to-trough decline in a fund’s value over a specified period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Sector allocation: How a fund’s holdings are distributed across different industries, such as technology or financials.
Holdings: Individual securities, like stocks or bonds, that a fund owns in its portfolio.
Diversification: Spreading investments across many securities or markets to reduce the impact of any single holding.

For more guidance on ETF investing, check out the full guide at this link.

Adé Hennis has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.