SPDW vs SCHE: Does a Developed Markets ETF Outpace an Emerging Markets Focus?

The State Street SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) focuses on established international markets, while the Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) targets growth in developing economies, offering distinct risk-reward profiles for global diversification.

Investors seeking to diversify away from the U.S. market often face a choice between the relatively stable economies of developed nations and the high-growth potential found in emerging markets. While both funds provide broad international exposure, they navigate different regulatory environments, geopolitical risks, and currency dynamics.

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 the trading day on Nov. 2, 2026.

The State Street fund is the more affordable option with a rock-bottom 0.03% expense ratio. It also offers a higher payout, with a 3.1% trailing-12-month dividend yield compared to the 2.8% yield found with the Schwab fund.

Performance & risk comparison

What's inside

The State Street SPDR Portfolio Developed World ex-US ETF provides exposure to established economies outside the U.S., with its portfolio concentrated in financial services at 24%, industrials at 17%, and technology at 15%. It holds 2,420 assets, and its largest positions include Sk Hynix (NASDAQ:SKHY) at 1.9%, and ASML Holding (NASDAQ:ASML) at 1.85%, and Roche Holding at 1%. The fund was launched in 2007. State Street SPDR Portfolio Developed World ex-US ETF has paid $1.52 per share over the trailing 12 months, which on its recent ~$49.45 share price works out to a 3.1% yield.

The Schwab Emerging Markets Equity ETF tracks the FTSE Emerging Index, providing a window into developing economies. The portfolio of 2,192 positions is weighted toward technology at 34%, financial services at 22%, and consumer cyclicals at 9%. Top holdings include Taiwan Semiconductor Manufacturing at 17.5%, Tencent Holdings at 3%, and Alibaba Group Holding (NYSE:BABA) at 2.3%. It was launched in 2010. Schwab Emerging Markets Equity ETF has paid $0.95 per share over the trailing 12 months, which on its recent ~$34.34 share price works out to a 2.8% yield.

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Which looks like the better buy?

Properly diversified American investors should be aiming to hold some non-U.S. equities in their portfolios. Each of these ETFs offers exposure to a vast selection of non-U.S. stocks, but they have key differences to take into account.

The State Street fund, SPDW, is heavily concentrated in Europe and Japan, which makes sense given the importance of those economies in the overall world picture. The fund is about 23% allocated in the Eurozone, with another 13% in European countries outside the Eurozone, which includes the likes of Switzerland and the U.K. Japan comprises nearly 22% of the portfolio. Other large presences in the portfolio include Canada at 11% and Australia at 6% of assets.

Some 80% of the SPDW ETF is in large-cap stocks, roughly equally split between growth and value names. That means the fund owns the biggest names in the economies it is invested in. That doesn't mean it's overweight in its top holdings; just about 12% of the assets are dedicated ot its top 10 holdings.

The Schwab ETF, SCHE, focuses on emerging markets, which are generally riskier markets that should offer superior returns over time, based on some widely accepted market theories. No surprise, then, that a large chunk of the portfolio is invested in Asia emerging markets, with 47% of assets there, plus another 33% in markets considered developed within Asia. The portfolio is less invested than may be expected in other emerging markets, like Africa (3% of the portfolio), Latin America (7%), and the Middle East (6% of assets).

A large majority, 86%, of assets are in large caps, skewed toward growth stocks in the SCHE portfolio.

Assuming either fund meets your bar for international diversification, which one should you choose? You're investing to make money, so go with the fund that makes returns more to investors over the long haul. In this case, that's SPDW, which has returned an annualized 22%, 9%, and 10% over the 3-year, 5-year, and 10-year time frames, respectively.

By comparison, SCHE has done decently but not as well compared to SPDW. with annualized returns of 18%, 5%, and 7% over the past three, five, and ten years.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.