VEA excludes U.S. stocks and charges 0.03% with a 2.54% yield. SPGM includes the U.S. at 0.09% with a 1.80% yield. The right pick depends on your existing portfolio.
The Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) and the State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) both offer global stock exposure. They fill different roles in a portfolio.
VEA holds 3,868 stocks across developed markets outside the U.S., covering Canada, Europe, and the Pacific. It excludes American companies entirely. The fund charges 0.03% in expenses and pays a trailing-12-month dividend yield of 2.54%. Top holdings include Samsung Electronics at 3.1%, SK hynix at 3.0%, and ASML Holding at 2.3%. The sector mix leans toward financial services at 23.1%, technology at 18.4%, and industrials at 17.9%.
SPGM, launched in 2012, takes a broader approach. It holds 2,927 stocks across developed and emerging economies, including the U.S. Its expense ratio is 0.09%, and the dividend yield is 1.80%. The largest positions are Nvidia at 4.1%, Apple at 3.7%, and Microsoft at 2.3%. Technology makes up 30.7% of the portfolio, followed by financial services at 16.5% and industrials at 12.7%.
The performance gap between the two funds reflects their sector and geographic differences. SPGM's heavier weighting in U.S. mega-cap growth stocks helped drive stronger five-year total returns. VEA's tilt toward financials and industrials ties it more to economic cycles and currency moves, particularly in the euro and yen. The higher dividend yield on VEA partly comes from the payout policies of non-U.S. banks and manufacturers.
For an investor who already owns a U.S. total-market or S&P 500 fund, VEA provides international diversification without duplicating American holdings. SPGM works better as a single core holding for someone building a portfolio from scratch, since it already includes U.S. stocks. The choice depends on what else is in the portfolio, not on which fund performs better in isolation.
For more on building a diversified equity allocation, see the stock market analysis page.
Disclosure: The Motley Fool has positions in and recommends ASML, Apple, Microsoft, Nvidia, and Vanguard FTSE Developed Markets ETF. Andy Gould has positions in Apple and Nvidia and has options positions in both stocks.
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