What is the international diversification benefit and has it worked in recent years?

The theoretical case for international diversification: different economic cycles — Europe, Japan, and EM countries don't always move in sync with the U.S. economy; when the U.S. is in recession, international economies may be growing; different sector exposures — European markets overweight financials, industrials, and consumer staples; these sectors may lead in different market environments than U.S. tech. The practical record: 2009-2023 — U.S. large-cap equities (S&P 500) dramatically outperformed international developed markets (VEA, EFA) during this period; the U.S. tech dominance, stronger economic recovery, and dollar appreciation made international diversification a drag on portfolio returns for over a decade. 2022 exception — value-heavy international markets briefly outperformed as rising rates punished high-multiple U.S. tech stocks. Arguments for why international diversification may work better going forward: U.S. valuations are historically elevated; international valuations are historically discounted; earnings cycles may converge; dollar strength may moderate; Japan corporate governance improvements and European green energy investments may generate earnings growth. Arguments against: U.S. structural advantages in technology innovation may sustain return differential indefinitely.

What is the South Korea classification difference between FTSE and MSCI and why does it matter?

South Korea is classified differently by the two major index providers: MSCI (used by iShares in EFA, MSCI-based ETFs) — classifies South Korea as an EMERGING market; South Korea is excluded from MSCI's developed market indices and included in MSCI EM (like EEM). FTSE (used by Vanguard in VEA, VXUS) — classifies South Korea as a DEVELOPED market; South Korea is included in FTSE's developed market indices. Why South Korea's classification has been debated: South Korea has high per-capita income, a sophisticated financial system, and developed infrastructure qualifying as 'developed' by many measures; however, restrictions on foreign currency transactions and limited off-shore foreign exchange markets have caused MSCI to keep it in emerging markets despite repeated reclassification reviews. Major South Korean companies: Samsung Electronics (world's largest memory semiconductor company), SK Hynix, POSCO, Hyundai Motor, LG — these are in VEA (via FTSE) but NOT in EFA or iShares MSCI developed market ETFs. Implications for investors: investors using VEA for international developed market exposure have South Korean tech exposure; investors using EFA/iShares MSCI-based international ETFs need a separate EM allocation to capture Korea.

How do currency exchange rates affect the performance of SPDW and VEA?

SPDW and VEA hold stocks denominated in foreign currencies — euros (European stocks), Japanese yen (Japan stocks), British pounds (UK stocks), Canadian dollars (Canadian stocks), Australian dollars (Australia stocks), and many others. When these foreign currencies weaken against the U.S. dollar: a European stock might rise 5% in euro terms, but if the euro falls 5% against the dollar simultaneously, the USD return for a U.S. investor holding that stock is approximately 0%; conversely, if the euro strengthens 5% while the European stock is flat, the U.S. investor earns approximately 5% in USD terms. Historical impact: 2014-2022 — the U.S. dollar generally strengthened against major currencies (euro, yen), creating a persistent headwind for SPDW and VEA returns measured in USD; U.S.-based investors in VEA and SPDW earned less than local-currency returns during dollar strengthening periods. Currency hedged alternatives: investors who want international developed market equity exposure without currency risk can use hedged versions of these ETFs — DBEF (Deutsche Bank currency-hedged EM equities), HEDJ (hedged European equities), DBJP (hedged Japan equities); however, currency hedging has costs (approximately 0.5-2% annually in a normal rate environment) that reduce returns when the dollar weakens.

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SPDW

SPDR Portfolio Developed World ex-US ETF (SPDW) · ETF - International Developed Market Equities

$51.83

+5.58% this month

VERSUS

⟷

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VEA

Vanguard FTSE Developed Markets ETF (VEA) · ETF - International Developed Market Equities

$72.31

+5.36% this month

Scoreboard verdict

Across expense ratio, momentum, yield, fund size, risk

SPDW

2

VEA

2

MIXED SETUP

Comparison scoreboard

MIXED SETUP

Exp. Ratio

SPDW 0.03%

VEA 0.03%

1Y Return

SPDW +34.02%

VEA ✓+34.18%

Div. Yield

SPDW ✓2.86%

VEA 2.61%

AUM

SPDW $40.94B

VEA ✓$317.3B

Beta

SPDW ✓0.84

VEA 0.85

Metrics last refreshed: 6/20/2026

Quick take

SPDW vs VEA ETF Comparison: AI Score, Valuation, Performance and Upside

SPDW and VEA are nearly identical in purpose and characteristics — both are ultra-low-cost international developed market equity ETFs providing broad exposure to European, Japanese, and Asia-Pacific developed market stocks. The differences are primarily the index provider (S&P for SPDW vs. FTSE for VEA), Vanguard's larger AUM and higher brand recognition for VEA, and minor country classification differences. Both are excellent core international equity ETFs; the choice often comes down to existing portfolio structure and brokerage preferences.

SPDW vs VEA is a low-cost international developed market equity comparison where differences are minimal — State Street's SPDW (S&P Developed ex-US BMI Index, ultra-low cost, SPDR Portfolio brand) versus Vanguard's VEA (FTSE Developed All Cap ex-US Index, world's largest AUM in international equities, Vanguard's brand) — both excellent, nearly interchangeable core international equity building blocks with the primary differentiator being cost and index provider preference.

Live analysis · updated 6/20/2026

SPDW and VEA are closely matched — they split the tracked metrics evenly. VEA has delivered stronger 1-year price return (+34.18% vs +34.02% for SPDW).

Normalized 1Y performance

SPDW

VEA

Recent returns

SPDW

VEA

Who should consider this stock?

SPDW may suit investors who:

→Already use State Street/SPDR ETFs and prefer maintaining a consistent SPDR Portfolio ETF family for simplicity — SPDW pairs naturally with SPFB (U.S. bonds), SPEM (EM equities), and SPLG (U.S. equities)
→Trade on platforms with preferential commission-free SPDW access or where SPDW has a specific advantage over VEA in terms of platform integration or ETF model portfolio support
→Value the S&P developed market index methodology's specific country and company selection criteria over the FTSE methodology

VEA may suit investors who:

→Use Vanguard accounts or Vanguard's Total International ETF approach, where VEA pairs naturally with VXUS (total international) or is the developed market allocation within a three-fund portfolio (VTI + VEA + BND)
→Value VEA's world-class liquidity and enormous AUM as providing maximum trading efficiency for both small and large investment amounts
→Already use Vanguard equity ETFs (VTI, VOO) and want to maintain a consistent Vanguard portfolio structure for simplicity and consistent expense ratio minimization

Performance & AI score

Metric	SPDW	VEA
ETF score	91.0	94.0
Latest close	$51.83	$72.31
1M return	+5.58%	+5.36%
6M return	+19.30%	+19.39%
1Y return	+34.02%	+34.18%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

Period	SPDW	VEA
1Y ago	$13.88K (+38.8%) started 2025-06-18	$13.92K (+39.2%) started 2025-06-18
5Y ago	$19.35K (+93.5%) started 2021-06-18	$19.7K (+97.0%) started 2021-06-18
10Y ago	$36.74K (+267.4%) started 2016-06-20	$38.12K (+281.2%) started 2016-06-20

Hypothetical — past performance does not guarantee future results.

Fund characteristics

Metric	SPDW	VEA
Expense ratio	0.03%	0.03%
Total assets (AUM)	$40.94B	$317.3B
Dividend yield	2.86%	2.61%
Trailing P/E	18.89	18.64
Beta	0.84	0.85
52-week change	34.02%	34.18%

Risk & fund metrics

Metric	SPDW	VEA
1Y return	+34.02%	+34.18%
6M return	+19.30%	+19.39%
1M return	+5.58%	+5.36%
1Y Sharpe ratio	1.60	1.60
Beta	0.84	0.85
Dividend yield	2.86%	2.61%
5Y CAGR	+10.35%	+10.55%

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

SPDW max drawdown11.55%

VEA max drawdown11.63%

SPDW max wkly drop6.96%

VEA max wkly drop7.06%

5Y risk snapshot

SPDW max drawdown30.21%

VEA max drawdown29.71%

SPDW max wkly drop10.59%

VEA max wkly drop10.51%

10Y risk snapshot

SPDW max drawdown34.98%

VEA max drawdown35.74%

SPDW max wkly drop20.69%

VEA max wkly drop20.94%

Performance metrics by period

Period	Metric	SPDW	VEA
1Y	Growth	+34.02%	+34.18%
	CAGR	+34.04%	+34.21%
	Sharpe ratio	1.60	1.60
	Max drawdown	11.55%	11.63%
	Max daily drop	3.71%	3.72%
	Max wkly drop	6.96%	7.06%
5Y	Growth	+63.65%	+65.12%
	CAGR	+10.35%	+10.55%
	Sharpe ratio	0.41	0.42
	Max drawdown	30.21%	29.71%
	Max daily drop	6.34%	6.33%
	Max wkly drop	10.59%	10.51%
10Y	Growth	+169.11%	+170.47%
	CAGR	+10.41%	+10.47%
	Sharpe ratio	0.40	0.40
	Max drawdown	34.98%	35.74%
	Max daily drop	11.19%	11.18%
	Max wkly drop	20.69%	20.94%

Fund overview

Category	SPDW	VEA
Fund name	State Street SPDR Portfolio Developed World ex-US ETF	Vanguard FTSE Developed Markets Index Fund ETF Shares
Type	ETF	ETF
Expense ratio	0.03%	0.03%
Total assets (AUM)	$40.94B	$317.3B
Dividend yield	2.86%	2.61%

SPDW strengths

→Ultra-low expense ratio makes SPDW one of the lowest-cost international ETFs available — SPDW's expense ratio is among the lowest for broad international ETFs; the SPDR Portfolio ETFs series was specifically designed to compete with Vanguard on cost
→S&P Developed ex-US BMI Index includes South Korea and Canada — the S&P index includes Canada and South Korea, which some other developed market indices (notably FTSE used by VEA) may classify differently, providing slightly different country exposure
→Broad inclusion of small-cap developed market stocks — SPDW's index includes small-cap international stocks in addition to large and mid-cap; small-cap international stocks have historically provided a valuation premium versus large-cap international equities

VEA strengths

→World-class liquidity as one of the largest international equity ETFs — VEA's enormous AUM (one of the top 10 largest ETFs globally) means institutional and retail investors can trade VEA with minimal market impact; tight spreads make VEA extremely cost-efficient to trade
→Vanguard's cost minimization ethos and mutual ownership structure — Vanguard is owned by its funds; the company's objective is minimizing costs for investors rather than maximizing profits for shareholders; VEA's expense ratio has been reduced multiple times
→FTSE index includes South Korea — FTSE classifies South Korea as developed market, so VEA includes Samsung, SK Hynix, and other Korean companies; investors who want Korean tech exposure within their developed market allocation benefit from this classification

Risks to watch — SPDW

→Currency risk from non-USD developed market holdings — SPDW's returns in USD are affected by the exchange rates of the euro, yen, pound, Canadian dollar, and other currencies; a rising USD reduces SPDW's USD returns even if underlying international stock prices rise in local currency
→International developed markets underperformance vs U.S. equities has been persistent — over the past decade, international developed market equities significantly underperformed U.S. equities; this was driven by U.S. technology sector dominance, stronger U.S. economic growth, and USD strength
→Japan and Europe economic challenges — Japan (historically approximately 20% of SPDW) faces structural economic challenges (demographic decline, corporate governance historically poor); European economies (approximately 45% of SPDW) face energy cost challenges, slower technology sector development, and cyclical vulnerabilities

Risks to watch — VEA

→Same currency, geopolitical, and international underperformance risks as SPDW — VEA and SPDW face identical macro risks: USD appreciation, European economic challenges, Japanese demographic headwinds, and continued U.S. equity outperformance
→FTSE versus MSCI methodology creates slight differences from iShares EFA (which uses MSCI) — investors combining VEA with MSCI-based ETFs should be aware of potential country weighting differences (South Korea in FTSE developed vs. MSCI emerging)
→Technology sector underweight versus U.S. equities — developed international markets have lower technology sector weights than U.S. indices; VEA's top sectors are industrials, financials, and healthcare rather than technology; this has contributed to underperformance during U.S. tech bull markets

Frequently asked questions

International developed market stocks (Europe, Japan, Asia-Pacific) consistently trade at lower price-to-earnings multiples than U.S. stocks. Reasons for the valuation gap: sector composition — U.S. markets are dominated by technology companies (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta) that command premium valuations for high growth and profitability; international markets have lower technology weights and higher exposures to financials, industrials, and consumer staples, which trade at lower multiples. Corporate governance and shareholder returns — Japanese and some European companies have historically held excess cash, cross-held shares in partner companies, and been less aggressive returning capital to shareholders (buybacks, dividends) than U.S. companies; improving shareholder focus (particularly in Japan under Abenomics and TSE corporate governance reforms) is gradually closing this gap. Growth expectations — U.S. companies have delivered higher earnings growth than European and Japanese peers over the past decade; lower growth typically justifies lower multiples. Currency and economic dynamism — U.S. economic growth has outpaced Europe and Japan post-2008; this differential growth and the associated dollar strength made USD-based international returns less attractive.

AI Prediction SignalNext 5 trading days

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SPDW

+2.8%BUY

VEA

+1.1%HOLD

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