Should You Go Global or Look to Emerging Markets?
Key Points
The Schwab Emerging Markets Equity ETF features a higher dividend yield and stronger one-year return but carries greater historical drawdown than the SPDR Portfolio MSCI Global Stock Market ETF.
The Schwab Emerging Markets Equity ETF is concentrated in emerging markets, with heavy exposure to Taiwan Semiconductor, Tencent, and Alibaba, while the SPDR Portfolio MSCI Global Stock Market ETF offers global diversification led by U.S. tech giants.
Liquidity is robust for both, but Schwab Emerging Markets Equity ETF manages far more assets under management (AUM) and is priced at a lower expense ratio.
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The State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) and the Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) differ most in geographic focus, historical risk, and size, with SCHE offering higher yield and a larger asset base but deeper drawdowns and an emerging markets tilt.
Both SPGM and SCHE can serve as core equity building blocks, but the comparison comes down to diversification and risk appetite. SPGM tracks global stocks across developed and emerging markets, while SCHE zeroes in on emerging economies, offering different sector and country exposures that may appeal depending on portfolio goals.
Snapshot (cost & size)
| Metric | SPGM | SCHE |
|---|---|---|
| Issuer | SPDR | Schwab |
| Expense ratio | 0.09% | 0.07% |
| 1-yr return (as of 2026-02-27) | 25.2% | 28.5% |
| Dividend yield | 1.8% | 2.7% |
| Beta | 0.90 | 0.53 |
| AUM | $1.5 billion | $12.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
SCHE comes in slightly more affordable at 0.07% compared to SPGM’s 0.09% expense ratio, and also delivers a higher dividend yield, which may appeal to income-focused investors.
Performance & risk comparison
| Metric | SPGM | SCHE |
|---|---|---|
| Max drawdown (5 y) | (25.92%) | (33.76%) |
| Growth of $1,000 over 5 years | $1,556 | $1,074 |
What's inside
SCHE focuses exclusively on emerging markets, tracking the FTSE Emerging Index for over 16 years. Its portfolio of 2,164 holdings is heavily tilted toward Technology (24%) and Financial Services (23%), with Taiwan Semiconductor Manufacturing (NYSE:TSM) making up a significant 14.96% of assets, followed by Tencent Holdings Ltd (0700.HK) and Alibaba Group Holding Ltd (NYSE:BABA). This concentration means returns could swing with a handful of dominant companies and countries.
SPGM, by contrast, offers broader diversification across 2,935 global stocks, spanning both developed and emerging markets. Its top holdings are U.S. tech leaders: Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), collectively accounting for less than 11% of assets. Sector exposure is led by Technology (24.74%), but it also includes a notable allocation to Financial Services (16.74%). Neither fund includes leverage, currency hedging, or ESG screens.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
International and emerging market stocks have performed very well over the past year or so, generally beating U.S. stocks.
Both of these ETFs give you exposure to those markets, with the Schwab ETF focusing on emerging markets and the SPDR ETF focusing on global investments.
Which ETF you invest in depends on what you are looking for. The Schwab ETF would be a great addition to a portfolio because of the diversification it offers. Emerging markets generally do not move in tandem with U.S. stocks, so it can offer a degree of balance to a portfolio.
The SPDR ETF, on the other hand, includes global stocks, but it is heavily weighted toward U.S. large caps, most notably, the Magnificent Seven. However, while some 60% of the portfolio is in U.S. stocks, it also provides access to other nations, including the United Kingdom, Japan, Canada, Taiwan, and China.
SPGM has been the better long-term performer, but if you are looking for an ETF to provide diversification and balance from U.S. large-caps, then SCHE might be the way to go.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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