Better International ETF: iShares' IEMG vs. State Street's SPGM

The real spread here is not “emerging markets vs global” but beta and concentration versus cash-flow durability. IEMG’s higher yield and stronger recent tape likely reflect a narrow leadership regime in Asian tech and materials, but that same concentration makes it more vulnerable to any setback in semiconductor capex, China policy, or USD strength. SPGM’s broader developed-market ballast should outperform when macro volatility rises and correlations go up, even if it lags in momentum-driven rallies.

A second-order issue is that both funds embed the same crowded winners at the top of the stack, especially TSM, NVDA, AAPL, and MSFT through different index pathways. That means the apparent “diversification” benefit of choosing the global fund is partly an illusion at the margin: if U.S. mega-cap tech de-rates, SPGM will not be insulated the way its market mix suggests, but it will likely absorb the shock better than IEMG because it has less single-country FX and policy risk. Conversely, if the next leg higher is driven by AI capex, memory pricing, and Taiwan supply-chain leverage, IEMG’s exposure to TSM and Korean semis gives it more torque than the headline beta implies.

The contrarian angle is that the market may be overpaying for the recent outperformance of emerging markets as if it were secular rather than cyclical. A 1-year return gap of this size often compresses once the dollar stabilizes or real rates back up, and IEMG’s deeper drawdown history suggests its income edge is not free—it is compensation for event risk and currency volatility. In other words, the better trade may be to own EM exposure only where the underlying earnings are improving faster than the ETF’s benchmark can capture.