Better Global ETF Buy: Can Investors Earn More with IEFA or SPGM?

Both the State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM 0.61%) and the iShares Core MSCI EAFE ETF (IEFA 0.37%) aim to provide diversified international equity exposure, but their approaches differ. SPGM tracks the entire global market, including the U.S. and emerging markets, while IEFA zeroes in on developed markets outside the U.S. and Canada.

This comparison highlights how cost, performance, risk, and sector makeup set them apart for investors seeking global diversification.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

IEFA edges out SPGM on affordability, with a slightly lower expense ratio. It also stands out for its higher dividend yield, offering a more substantial payout for income-focused investors.

Performance & risk comparison

What’s inside

IEFA tracks developed markets outside the U.S. and Canada, providing exposure to 2,588 holdings across regions like Europe and Asia. The fund leans toward financial services (23%) and industrials (20%), with its largest positions in ASML, Roche Holding AG, and HSBC Holdings. With over 13 years of history and $172 billion in assets under management, IEFA offers broad, liquid access to international developed equities.

SPGM, meanwhile, includes global equities from both developed and emerging markets. It features a notable technology tilt, making up 25% of assets. Its top holdings — Nvidia, Apple, and Microsoft — reflect this focus. SPGM covers a wider market with more than 8,000 holdings, but its asset base is much smaller than IEFA’s, and it places greater weight on U.S. tech giants.

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What this means for investors

Global ETFs can help diversify your portfolio outside of U.S. equities, and both SPGM and IEFA offer distinct benefits for those seeking international exposure.

Emerging markets can be more volatile, but they often boast greater growth potential. Developed markets, on the other hand, can offer more stability.

SPGM provides exposure to both emerging and developed markets within the U.S. and internationally, essentially capturing the entire global market. That massive diversification can help balance risk and reward. This fund has experienced a milder max drawdown over the last five years, suggesting less severe volatility.

IEFA is much narrower than SPGM, as it covers only developed markets outside of the U.S. and Canada. It’s earned higher 12-month total returns, despite experiencing more significant price swings with a steeper max drawdown. IEFA also offers a substantially higher dividend yield, which could make it a smart option for those looking to build passive dividend income.

Investors seeking a very broad fund covering developed and emerging markets may prefer SPGM’s diversified approach, while those seeking only international developed market exposure might be better off with IEFA.