Not All Global Stock ETFs Are the Same. Is the SPDR SPGM ETF Better than iShares URTH for Investors?

While both funds provide broad international equity access, State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) offers a lower expense ratio and broader diversification than iShares MSCI World ETF (NYSEMKT:URTH).

Comparing URTH and SPGM reveals two distinct global strategies. URTH focuses exclusively on companies in developed economies, while SPGM provides all-cap exposure across both developed and emerging markets, potentially serving as a more comprehensive core holding for long-term investors seeking total market representation.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the close of trading on July 20th.

SPGM is the more affordable option with a 0.09% expense ratio compared to 0.24% for URTH. Additionally, SPGM currently offers a higher payout, providing a 0.42 percentage point yield advantage over its competitor.

Performance & risk comparison

What's inside

State Street SPDR Portfolio MSCI Global Stock Market ETF replicates the MSCI ACWI IMI Index, providing exposure to 2,927 holdings across developed and emerging markets. This all-cap strategy includes large, mid, and small-cap companies, which may help mitigate country-specific risks. Its largest positions include Nvidia (NASDAQ:NVDA) at 4.1%, Apple (NASDAQ:AAPL) at 3.7%, and Microsoft (NASDAQ:MSFT) at 2.3%. The portfolio is weighted toward technology at 31%, financial services at 17%, and industrials at 13%. It was launched in 2012. State Street SPDR Portfolio MSCI Global Stock Market ETF has paid $1.54 per share over the trailing 12 months, which on its recent ~$84.28 share price works out to a 1.80% yield.

iShares MSCI World ETF focuses on a narrower index of 1,309 companies located solely within developed global economies. This concentration results in a slightly different risk profile compared to more comprehensive global funds. Its largest positions include Nvidia at 5.2%, Apple at 4.8%, and Microsoft at 3%. The fund allocates 31% to technology, 16% to financial services, and 11% to industrials. It was launched in 2012. iShares MSCI World ETF has paid $2.84 per share over the trailing 12 months, which on its recent ~$201.10 share price works out to a 1.40% yield.

Which fund is the better buy?

There’s a world of stocks to be had with both of these ETFs, but looking under the hood, there are key differences for investors to weigh.

URTH, the iShares MSCI World ETF, ignores a portion of the world, emerging markets, to focus on the developed world that generates the vast majority of stock market gains. Since the U.S. is such a significant part of the world economy, it accounts for 72% of the holdings of URTH, with the balance in markets like Europe and developed Asian countries, primarily Japan. That also means all its top 10 holdings are U.S. stocks (which is true of its competitor here as well).

SPGM, the State Street SPDR Portfolio MSCI Global Stock Market ETF, accounts for emerging markets, which make up 6% of its portfolio, while the U.S. is 63% of holdings, with the developed world at 31%. SPGM also has exposure to small caps, which URTH doesn’t. SPGM has 5% of its portfolio in small caps, which means weightings to large and mid caps are slightly less than URTH’s.

Given the slightly different approaches to representing global equity markets, it’s no surprise there is a difference in performance. The inclusion of small caps means SPGM has captured some of the rally small cap stocks have been enjoying. Small caps are having their best year since 1991, making up for years of underperformance.

Year-to-date SPGM is 12.3%, compared to 9.9% for URTH, continuing the 1-year besting of URTH noted in the table above. Similarly, over the past three years, SPGM edges URTH 20.2% to 19.4% annualized returns. Longer term, URTH nicks the lead from SPGM by virtue of the small cap sector’s past underperformance, but the differences are only slight. Both funds have returned about 11.5% and 13.25% to investors over the 5-year and 10-year time frames.

Given SPGM also has a small maximum drawdown compared to URTH and a better dividend yield, the best way to play the world of stocks is to add SPGM to your portfolio.

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

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.