SPDW vs SCHE: Does a Developed Markets ETF Outpace an Emerging Markets Focus?
State Street's fund holds lower costs and higher dividend yield, while Schwab's emerging-market play offers exposure to high-growth developing economies.
The State Street SPDR Portfolio Developed World ex-US ETF (SPDW) and the Schwab Emerging Markets Equity ETF (SCHE) are two distinct investment options for global diversification. SPDW focuses on established international markets, while SCHE targets growth in developing economies. Both funds provide broad international exposure but navigate different regulatory environments, geopolitical risks, and currency dynamics.
SPDW has a lower expense ratio of 0.03% compared to SCHE's 0.16%. It also offers a higher trailing-12-month dividend yield of 3.1%, compared to SCHE's 2.8%. SPDW invests in established economies outside the U.S., with its top holdings including Sk Hynix, ASML Holding, and Roche Holding. SCHE, on the other hand, is heavily invested in Asia emerging markets, with 47% of its assets allocated there, and a portfolio skewed toward growth stocks.
Its top holdings include Taiwan Semiconductor Manufacturing, Tencent Holdings, and Alibaba Group Holding.
Assuming the goal is to maximize returns over the long haul, SPDW appears to be the better choice. It has delivered higher annualized returns over the 3-year, 5-year, and 10-year time frames compared to SCHE. However, the decision between the two should also take into account the investor's risk tolerance, investment horizon, and overall portfolio strategy.
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