Comparing International ETFs: Schwab's SCHE vs. State Street's SPGM

The State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) offers all-in-one exposure to developed and emerging markets, while the Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) focuses exclusively on developing economies.

Investors seeking broad international exposure often decide between a total-world approach and a targeted regional tilt. While SPGM covers the entire global equity landscape including the U.S., SCHE limits its scope to emerging markets. This analysis examines how these distinct geographic mandates influence costs, risk profiles, and historical performance.

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. Dividend yield is the trailing-12-month distribution yield.

The Schwab fund is slightly more affordable, featuring a 0.07% expense ratio compared to 0.09% for the State Street fund. It also offers a significantly higher distribution, with a trailing-12-month dividend yield of 2.60% compared to 1.70% for the global ETF.

Performance & risk comparison

What's inside

The Schwab Emerging Markets Equity ETF seeks to track the total return of the FTSE Emerging Index, holding 2,211 securities across the market cap spectrum. Its largest positions include Taiwan Semiconductor Manufacturing at 16.31%, Tencent at 3.44%, and Alibaba Group at 2.94%. Launched in 2010, the fund allocates 27% to technology and 22% to financial services. It paid $0.94 per share over the trailing 12 months.

The State Street SPDR Portfolio MSCI Global Stock Market ETF provides a wider net via the MSCI ACWI IMI Index, encompassing 2,949 holdings. Its top positions include Nvidia at 4.37%, Apple at 3.54%, and Microsoft at 2.74%. Launched in 2012, it is part of a low-cost suite designed for core diversification. The fund tilts 25% toward technology and 17% toward financial services, with a trailing-12-month dividend of $1.45 per share.

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What this means for investors

For those seeking to invest beyond solely domestic stocks, the Schwab Emerging Markets Equity ETF (SCHE) and State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM) provide this. Choosing between these funds depends on a few key factors.

SCHE targets only emerging markets as a means of delivering outsized returns, since these are fast-growing economies. Income-focused investors may find its far higher dividend yield appealing, and it’s less expensive as well.

However, as its top holdings illustrate, it has a substantial stake in Chinese companies, which comprise 31% of the portfolio. While Chinese stocks can perform well, the political climate can shift quickly, and cause the fund’s performance to falter, as illustrated in its higher max drawdown. In addition, one stock, Taiwan Semiconductor Manufacturing, represents a hefty 16% of the ETF’s holdings, meaning a lot rides on this company.

In contrast, SPGM is designed to be a foundational component of a portfolio, since it delivers exposure to equities around the world, including the U.S. In fact, the U.S. comprises 62% of this ETF’s holdings.

For investors who want a more international-focused fund, SPGM isn’t that. But it provides exposure to a range of developed and emerging economies, making it a great building block for those who are getting started in investing.

Robert Izquierdo has positions in Alibaba Group, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.