IEFA vs. SPDW: Broad International Exposure With Different Portfolio Designs

iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) and SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) both offer broad international developed-market equity exposure, and SPDW stands out for its notably lower expense ratio and slightly higher recent total return. IEFA, on the other hand, commands much higher assets under management (AUM) and a broader portfolio.

Both IEFA and SPDW are designed for investors seeking diversified access to developed markets outside the United States. This comparison highlights key differences in cost, recent performance, portfolio structure, and underlying holdings to help clarify which fund may better align with your investment goals.

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 is more cost-effective, with an expense ratio of 0.03% versus IEFA’s 0.07%, while IEFA offers a marginally higher dividend yield at 3.4% versus SPDW’s 3.2%.

Performance & risk comparison

What's inside

SPDW provides exposure to developed international equities, excluding the U.S., across 2,390 holdings. Its biggest sector weights are financial services (23%), industrials (19%), and technology (11%). The fund’s largest positions include Roche Holding Ag Genusschein (ROG.SW) 0.98%, Novartis Ag Reg (NOVN.SW) 0.92%, and Toyota Motor Corp (7203.T) 0.85%, each representing less than 1% of assets, reflecting a diversified top layer. SPDW has operated for over 18 years and aims to mitigate country-specific risk by spreading assets across multiple markets.

IEFA holds a broader basket, with 2,589 stocks and a similar sector mix: financial services (22%), industrials (20%), and healthcare (11%). Its top holdings—Asml Holding Nv (AMS: ASML.AS) at 1.89%, Roche Holding Par Ag (SIX: ROG.SW) at 1.23%, and Astrazeneca Plc (LSE: AZN.L) at 1.22%—each make up a little over 1% of assets. IEFA’s huge size, with nearly $169 billion in assets under management (AUM), may support liquidity for large investors, while both funds have no structural quirks.

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

What this means for investors

IEFA and SPDW both provide broad access to developed markets outside the United States, but they define that opportunity in slightly different ways. IEFA follows the MSCI EAFE framework, which allocates exposure primarily to Europe and Japan and excludes Canada. SPDW tracks a developed ex U.S. index that includes Canada, subtly reshaping country exposure and sector balance. That difference may look minor on paper, but it can show up in performance when Canada either outperforms or lags other developed markets

Cost and scale create a second point of separation. SPDW’s notably lower expense ratio gives it a structural advantage for investors who plan to hold international equities over long periods, where small fee differences will compound over time. IEFA’s much larger asset base reflects its role as a core holding for many institutions and large allocators, where liquidity and trading depth matters more. Both ETF’s portfolio construction is similar at a high level, but IEFA’s largest positions tend to carry slightly more weight, while SPDW spreads exposure a bit more evenly across its top holdings.

For investors, the choice is about how international exposure fits into the portfolio as a whole. IEFA aligns well with a traditional EAFE allocation that excludes Canada and mirrors long standing benchmarks. SPDW may appeal to investors seeking broader developed market coverage and lower ongoing costs. The more important decision is not to focus too much on which fund has the better recent return, but rather on which definition of developed markets best matches your long-term investment strategy.

Glossary

ETF: Exchange-traded fund that holds a basket of securities and trades like a stock.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund’s average assets.
Dividend yield: Annual dividends paid by a fund divided by its current share price, shown as a percentage.
Total return: Investment performance including price changes plus all dividends, assuming dividends are reinvested.
Beta: Measure of an investment’s volatility compared with the overall market, typically the S&P 500.
Assets under management (AUM): Total market value of all assets that a fund or manager oversees.
Max drawdown: Largest peak-to-trough decline in value over a specified period, showing worst historical loss.
Developed markets: Economies considered advanced, with mature financial systems, such as Europe, Japan, and Australia.
Sector weights: Percentage of a fund’s assets invested in each industry category, like financials or technology.
Holdings: Individual securities, such as stocks or bonds, that a fund owns in its portfolio.

Eric Trie has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.