EEM vs. SPGM: EEM Delivers Higher Returns but Costs More Than SPGM

The State Street SPDR Portfolio MSCI Global Stock Market ETF(NYSEMKT:SPGM) and the iShares MSCI Emerging Markets ETF(NYSEMKT:EEM) differ most in cost, risk profile, and geographic focus: EEM charges much higher fees and concentrating on emerging markets, while SPGM offers broader global diversification at a lower expense.

SPGM aims to provide low-cost, diversified exposure to both developed and emerging global equities, making it a core holding for investors seeking worldwide stock market coverage. In contrast, EEM focuses specifically on large- and mid-cap stocks within emerging economies, offering a targeted way to access faster-growing markets but with a narrower, more volatile profile. This comparison highlights each fund’s cost, recent performance, risk, and portfolio composition to help clarify which approach may better fit different objectives.

Snapshot (cost & size)

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.

SPGM stands out for its far lower expense ratio, making it the more affordable option for cost-conscious investors, while EEM charges a much higher fee. EEM offers a slightly higher dividend yield, which may appeal to those seeking a modestly larger income stream from emerging markets exposure.

Performance & risk comparison

What's inside

EEM tracks an emerging markets index and currently holds 1,223 stocks, with a pronounced tilt toward technology (34%) and financial services (19%). Its top holdings are Taiwan Semiconductor Manufacturing(NYSE:TSM) at 12.51%, Samsung Electronics Ltd(FRA:SSU) at 5.24%, and Tencent Holdings Ltd(OTC:TCEHY) at 3.67%. With more than 23 years of history, EEM offers access to some of the largest companies in Asia and Latin America, but its concentration in a handful of tech giants can lead to higher volatility and deeper drawdowns during market stress.

SPGM, by contrast, provides exposure to nearly 3,000 companies across developed and emerging markets, with technology (25%), financial services (17%), and industrials (14%) as its largest sectors. Its top holdings—Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT)—are all U.S.-based technology leaders, providing a different geographic and sector balance than EEM. SPGM’s broad diversification helps reduce country and single-stock risk, leading to a smoother ride for investors.

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What this means for investors

Global and emerging markets exchange-traded funds (ETFs) are a useful component for many investment portfolios. Moreover, State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM) and the iShares MSCI Emerging Markets ETF (EEM) are worth considering. Here’s how they stack up against one another.

SPGM has the edge in a few areas. First, SPGM has a big advantage in fees. The fund charges only 0.09%. EEM, on the other hand, charges 0.72%. What’s more, SPGM is a global fund, rather than a strictly emerging markets fund. This makes the fund more stable, as evidenced by SPGM’s lower maximum drawdown than EEM.

EEM has some advantages, too. It has a higher dividend yield of 2.2% than SPGM’s 1.9%. EEM also has a much larger AUM ($25.2 billion vs. $1.4 billion). Finally, EEM has performed better over the last year. EEM has generated a return of 26.2% over the last year, while SPGM has advanced by 17.6%.

In summary, SPGM has a key edge on fees, while EEM has performed better over the last year and has a higher dividend yield. Consequently, cost-conscious investors may prefer SPGM, while those willing to accept higher risk may opt for EEM.

Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tencent and is short shares of Apple. The Motley Fool has a disclosure policy.