Which Is the Better International ETF, State Street’s SPDW Targeting Developed Markets or Vanguard’s Emerging Markets-Focused VWO?

The State Street SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) offers a lower-cost path to international exposure through established markets, while the Vanguard FTSE Emerging Markets ETF (NYSEMKT:VWO) provides access to developing economies with higher volatility.

Investors looking for international diversification often choose between developed and emerging markets. SPDW tracks established economies outside the United States, while VWO targets regions with faster growth potential but higher political and economic risk. Both serve as foundational building blocks for a global portfolio.

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 State Street fund is more affordable than the Vanguard fund. It also offers a higher payout, providing a higher distribution yield compared to the Vanguard fund.

Performance & risk comparison

What’s inside

The State Street SPDR Portfolio Developed World ex-US ETF primarily holds financial services, industrials, and technology sectors, representing 22%, 18%, and 17% of the portfolio respectively. Its 2,453 holdings include Samsung Electronics at 3.18%, SK Hynix Inc. at 2.66%, and ASML at 2.17%. The fund was launched in 2007 and has a trailing-12-month dividend of $1.47 per share.

The Vanguard FTSE Emerging Markets ETF concentrates on technology (30%), financial services (20%), and consumer cyclical (11%) sectors. Its largest positions among 5,942 holdings include Taiwan Semiconductor Manufacturing Co. at 14.69%, Tencent Holdings at 2.75%, and Alibaba Group at 2.26%. The fund was launched in 2005 and paid $1.45 per share over the trailing 12 months.

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

What this means for investors

Investors seeking international stocks have two different approaches to consider with the State Street SPDR Portfolio Developed World ex-US ETF (SPDW) and Vanguard FTSE Emerging Markets ETF (VWO). Which to choose depends on whether you want stocks in developed markets or emerging markets.

VWO’s focus on emerging markets gives you exposure to high-growth economies, but the trade-off is greater volatility and risk. In fact, Vanguard classifies VWO as one of its most aggressive funds subject to wide swings in share price. That said, VWO is well-diversified given its large number of holdings, and its massive AUM delivers high liquidity. VWO is for investors who want the potential for large gains and is comfortable with the greater volatility.

Since SPDW targets developed markets, it offers more stability than VWO, making it an attractive fund for conservative investors. It sports a very low expense ratio, lower than Vanguard, which is known for low fees. SPDW’s AUM and number of holdings are both a good size, making it an all-around solid ETF to buy and hold for the long term.

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Robert Izquierdo has positions in ASML, Alibaba Group, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, Tencent, and Vanguard FTSE Emerging Markets ETF. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Which Is the Better International ETF, State Street’s SPDW Targeting Developed Markets or Vanguard’s Emerging Markets-Focused VWO? was originally published by The Motley Fool