Andy Gould, The Motley Fool
5 min read
Global equity ETFs offer a one-stop shop for worldwide exposure. Investors looking for the ultimate in diversification may favor the Vanguard Total World Stock ETF (NYSEMKT:VT), while State Street SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) offers slightly higher recent returns. Here’s how these two heavyweights stack up for long-term investors.
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.
VT is the slightly cheaper option, with an expense ratio of 0.06% versus 0.09% for SPGM. However, SPGM carries a modestly higher dividend yield of 1.81% compared to VT’s 1.59%.
Performance & risk comparison
What’s inside
Launched in 2008, VT diversifies across a broad spectrum of 10,068 global companies, with its largest sector weights in technology at 29.2%, financial services at 16.8%, and industrials at 11.5%. Its largest positions include Nvidia (NASDAQ:NVDA) at 4%, Apple (NASDAQ:AAPL) at 3.8%, and Microsoft (NASDAQ:MSFT) at 3%.
SPGM also aims for comprehensive global exposure with its 2,922 holdings. Its top sectors include technology at 28.7%, financial services at 17.5%, and industrials at 12.6%. Its largest positions are the same three companies — Nvidia at 4.1%, Apple at 4%, and Microsoft at 2.9%. SPGM was launched in 2012.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Before discussing what differentiates these two funds, it’s worth exploring their similarities. VT and SPGM own many of the same companies in roughly the same proportions. Nvidia, Apple, and Microsoft sit atop both portfolios, and the two funds’ sector weights differ by only a percentage point or two. When two funds overlap that heavily, any significant performance difference usually traces back to small differences in index construction — for example, how much weight goes to small caps or emerging markets, and when each index rebalances. For the record, SPGM boasts slightly better returns over the past one- and five-year periods — but that’s most likely because SPGM’s portfolio leans just a little more toward the largest companies, which have been some of the market’s best performers as of late.
