SPDW Offers Cheaper, Higher-Yielding Ex-US Exposure Than SPGM
Investors weighing international diversification face a clear trade-off between State Street’s all-in-one global ETF SPGM and its cheaper, higher-yielding ex-US counterpart SPDW.
State Street Global Advisors offers two distinct paths for equity diversification, but the SPDR Portfolio Developed World ex-US ETF (SPDW) significantly undercuts the SPDR Portfolio MSCI Global Stock Market ETF (SPGM) on both cost and income. SPDW carries an expense ratio of just 0.03%, compared to 0.09% for SPGM. The developed market fund also delivers a trailing 12-month yield of 3.10%, sharply higher than SPGM's 1.80%.
The divergence stems from the distinct mandates of the two funds, forcing portfolio managers to decide between total global convenience and targeted international exposure. SPGM acts as a single-ticket solution, capturing the entire world including the United States. SPDW functions strictly as an ex-US building block, excluding American markets entirely to isolate developed international economies.
This structural difference drives distinct portfolio compositions. SPGM tracks the MSCI ACWI IMI Index, holding 2,927 stocks heavily skewed toward US mega-cap technology. Tech accounts for 31% of the fund, with Nvidia at 4.33%, Apple at 4.17%, and Microsoft at 2.40% anchoring a portfolio where financials and industrials follow at 16% and 13%.
Conversely, SPDW follows the S&P Developed Ex-U.S. BMI Index with 2,439 holdings, displaying a dramatically different sector profile. A significant 32% of the fund sits in cash and others, a category that alters the overall risk calculation compared to pure equity funds. Financials represent 18% of assets, while top positions feature Asian and European tech leaders like Samsung at 2.50%, Sk Hynix at 2.16%, and ASML Holding at 2.11%.
The higher yield of SPDW reflects its recent share price of roughly $49.45 against $1.52 in distributions over the past year. SPGM has paid $1.54 per share but trades around $84.27, diluting its yield. Both funds have extensive track records, with SPDW launching in 2007 and SPGM debuting in 2012.
For market participants, the choice between the two hinges on existing domestic allocations. Investors lacking any international exposure might find SPGM's comprehensive reach useful despite the higher fee. However, for those already holding a separate US equity fund, SPDW provides a precise, cost-efficient tool to access developed markets overseas without redundantly overlapping American holdings.
