In recent years, global equity markets have presented compelling opportunities beyond the United States. The State Street SPDR Portfolio Developed World ex-US ETF (SPDW) stands out, having consistently outperformed the S&P 500 in both 2025 and 2026, building on impressive earlier gains. This strong showing reflects a shift in market dynamics, where international stocks are gaining traction. A primary driver behind this resurgence is the appealing valuations found in developed international markets, particularly as the appreciation of the U.S. dollar has stabilized against other major currencies.
SPDW's portfolio boasts significantly lower price-to-earnings ratios compared to the S&P 500, whether considering current or projected earnings. This valuation gap suggests that international equities offer more growth potential for every dollar invested. Furthermore, the ETF provides extensive diversification by investing in approximately 2,452 individual companies across numerous national economies. This broad exposure helps mitigate specific company or country-level risks, offering investors a more stable and varied investment landscape.
However, like any investment, SPDW carries its own set of considerations. A significant allocation to cyclical sectors and an inherent short exposure to the U.S. dollar introduce potential vulnerabilities. These factors could amplify losses during economic downturns or periods of heightened market volatility. Investors should therefore weigh these risks against the attractive valuations and diversification benefits when considering SPDW as part of their investment strategy.
Investing in international markets through funds like SPDW can offer a pathway to participate in global economic growth and benefit from diverse valuation opportunities. By carefully assessing both the potential rewards and inherent risks, investors can make informed decisions that align with their long-term financial objectives and contribute to a well-rounded portfolio.
