Vanguard’s VT vs. State Street’s SPGM: Which Global Stock ETF Is the Better Buy?

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 (VT +0.00%), while State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM -0.23%) 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 (NVDA -0.96%) at 4%, Apple (AAPL +1.57%) at 3.8%, and Microsoft (MSFT +0.61%) 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.

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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.

The differences in each fund’s number of holdings look dramatic, but they matter less than they might appear to. VT’s 10,000+ positions reflect a strategy of owning essentially the entire investable global market, while SPGM tracks a comparable global benchmark using a smaller portfolio of 2,922 stocks. The end result is similar exposure for both funds.

Also worth noticing: both funds lean heavily on U.S. megacap tech. “Global” in both cases still means a portfolio led by the same handful of American technology giants. A market-cap-weighted global index gives the biggest companies the biggest slice, and right now those companies are American tech firms.

The two funds also charge similar fees. Both funds feature a rock-bottom expense ratio — 0.06% for VT and 0.09% for SPGM.

Bottom line: Either of these funds is a sensible choice. However, VT is probably the more natural core holding for a buy-and-hold investor who wants one fund to serve as an entire stock portfolio and plans to add to it for years. Its 3-basis-point cost edge will be trivial in any single year but can compound meaningfully across decades. SPGM might make more sense for income-focused investors seeking a higher dividend, or for those already building around State Street’s low-cost SPDR Portfolio lineup.