Getting International Exposure in ETFs Isn't Always an Easy Choice. Is SPGM or IEFA the Better Buy for 2026?
2026-07-21 18:14
•Brendan Coffey •The Motley Fool
••• •• Axe Capital view
SPGM or IEFA: Picking the Right International ETF for Your Portfolio
Choosing between SPGM and IEFA depends on your existing U.S. exposure and dividend priorities.
International ETFs are often touted as easy ways to diversify beyond local stocks. SPGM and IEFA stand out but serve distinct purposes. SPGM leans heavily on U.S. stocks — about 63% — which has powered its stronger returns over recent years, outperforming IEFA by a decent margin. If you don’t hold U.S. equity elsewhere, SPGM offers broader global exposure, simplifying your investments. IEFA, on the other hand, excludes the U.S. but benefits from a higher dividend yield (3.4% versus SPGM’s 1.8%) and lower costs. That makes IEFA attractive if you want genuine diversification beyond North America or rely on dividend income. South African investors should consider how these ETFs fit alongside existing global holdings—especially given rand volatility, which can amplify or dampen returns from offshore. Forgetting your U.S. allocation or betting too much on yield alone could backfire. this is just my opinion and not financial advice
For diversified global equity exposure including the U.S., buy SPGM but trim exposure if you already hold significant U.S. assets. If focusing on developed non-U.S. markets with dividends, watch IEFA closely. Don’t overload on both.
- SPGM
- IEFA
- USD/ZAR
- Rand volatility impacting offshore returns
- U.S. market corrections reducing SPGM performance
6/10
SPGM and IEFA offer different approaches to international equity exposure. SPGM provides global exposure including 63% U.S. holdings and has outperformed IEFA with 23.1% one-year returns versus 19.9%. IEFA focuses exclusively on developed markets outside North America with higher dividend yield (3.4% vs 1.8%) and lower expense ratio (0.07% vs 0.09%). The choice depends on whether investors already have U.S. exposure elsewhere in their portfolio.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Brendan Coffey
Categories: Rates, Equities, Capital Returns
Tickers: SPGM, IEFA
Sentiment: Positive - SPGM outperformed IEFA across all time frames (1-year: 23.1% vs 19.9%, 5-year: 11.4% vs 8.8%, 10-year: 13.1% vs 9.8%). The fund's inclusion of U.S. exposure (63% of holdings) has been a significant performance driver. Better suited for investors seeking comprehensive global equity exposure. IEFA offers advantages for specific investor needs: lower expense ratio (0.07%), significantly higher dividend yield (3.4%), and pure developed international exposure outside North America. Ideal for investors who already have U.S. equity exposure and seek true non-U.S. diversification.
Keywords: ETF comparison, international exposure, global equity funds, dividend yield, expense ratio, portfolio diversification
Insights:
- SPGM: Positive: SPGM outperformed IEFA across all time frames (1-year: 23.1% vs 19.9%, 5-year: 11.4% vs 8.8%, 10-year: 13.1% vs 9.8%). The fund's inclusion of U.S. exposure (63% of holdings) has been a significant performance driver. Better suited for investors seeking comprehensive global equity exposure.
- IEFA: Positive: IEFA offers advantages for specific investor needs: lower expense ratio (0.07%), significantly higher dividend yield (3.4%), and pure developed international exposure outside North America. Ideal for investors who already have U.S. equity exposure and seek true non-U.S. diversification.
Related coverage
- The Trump Administration Launches "Project Prometheus" With These Nuclear Energy Stocks (Hint: NuScale Didn't Make the Cut)
- Caterpillar's Dividend Has Grown for 32 Consecutive Years. Its Dividend Yield Is Now Down to 0.75%.
- Meet the 9 Vanguard ETFs That Are Buying SpaceX Stock in Droves. Here's My Top Pick of the Bunch.