Global ETFs: Which is Better, SPGM or VWO?

Vanguard FTSE Emerging Markets ETF (NYSEMKT:VWO) offers low-cost, specialized exposure to emerging markets, while State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) provides a broad, all-cap portfolio covering both established and developing global economies.

Deciding between these funds involves choosing between a specialist and a generalist. The Vanguard fund is a pure-play option for those seeking to capture the growth of developing economies. In contrast, the SPDR fund serves as a core building block for a total stock market strategy, blending the stability of developed markets with the potential of emerging markets.

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 Vanguard fund is slightly more affordable with its 0.06% expense ratio. It also offers a higher payout, with a trailing-12-month yield of 2.40% compared to the SPDR fund’s 1.90%.

Performance & risk comparison

What's inside

State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) holds 2,922 stocks and was launched in 2012. It aims to replicate the total return of the MSCI ACWI IMI Index, before fees are accounted for. Its sector exposure is led by technology at 31.00%, financial services at 16.00%, and industrials at 12.00%. Its largest positions include Nvidia (NASDAQ:NVDA) at 4.28%, Apple (NASDAQ:AAPL) at 3.86%, and Microsoft (NASDAQ:MSFT) at 2.47%. The fund had a trailing-12-month dividend of $1.54 per share and an ex-dividend date of June 1, 2026. With $1.7 billion in assets under management (AUM), it provides broad diversification across market capitalizations.

Vanguard FTSE Emerging Markets ETF (NYSEMKT:VWO) tracks the FTSE Emerging Markets All Cap China A Inclusion Index and was launched in 2005. The fund holds 5,942 positions and manages $162.8 billion in assets under management (AUM), concentrating on technology at 30.00%, financial services at 20.00%, and consumer cyclical at 11.00%. Its top holdings include Taiwan Semiconductor Manufacturing (NYSE:TSM) at 14.67% and Alibaba Group Holding (NYSE:BABA) at 2.26%. It paid $1.45 per share over the trailing 12 months. This concentrated focus on developing economies often results in higher price fluctuations than diversified global funds.

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

Which looks like the better buy

Vanguard FTSE Emerging Markets ETF (VWO) and the State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM) are both international exchange-traded funds (ETFs), with significant exposure to non-U.S. stocks. Here’s how they compare to one another.

First, there’s VWO. This fund is ideal for buy-and-hold investors seeking exposure to emerging markets stocks. The fund is well diversified, with nearly 6,000 holdings and more than $160 billion in AUM. With its massive number of holdings, the fund is not overly exposed to any one emerging market or stock. In addition, the fund boasts a very low expense ratio of only 0.06%. Income-oriented investors will also appreciate its solid 2.4% dividend yield. As for performance, the fund has lagged the benchmark S&P 500. VWO has delivered a total return of 319% and a CAGR of 7.0% since its inception in 2005. The S&P 500, meanwhile, is up 815% over the same period, with a CAGR of 11.0%.

Then, there’s SPGM. This fund takes a different approach. It also holds many stocks, with nearly 3,000 holdings. However, its top holdings are actually American companies, like Nvidia, Microsoft, and Apple. This is because SPGM tracks a global stock index, which means it still retains significant exposure to the U.S. stock market. At any rate, this fund will appeal to investors seeking truly global exposure, inclusive of American stocks. Performance-wise, the fund has delivered decent returns, although they have lagged the S&P 500. Since 2012, SPGM has posted a total return of 368%, with a CAGR of 11.4%. That trails the S&P 500, which has delivered a total return of 603%, with a CAGR of 14.6% over the same period.

To sum up, VWO is a great fund for investors seeking to diversify their portfolios with exposure to purely non-U.S. stocks. It’s well diversified and has a low expense ratio. SPGM, on the other hand, is better suited to investors seeking a core holding that encapsulates the entire global stock market, including U.S. stocks. It also has an affordable expense ratio of only 0.09%.

Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Vanguard FTSE Emerging Markets ETF. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.