With so many ETFs consisting of similar holdings and exposure, many times judging one against another becomes a case of each one's idea of building a better mousetrap.

Recently, my colleague Jen Ryan reported that Vanguard is coming out with an ETF that will be similar to iShares MSCI EAFE ( EFA), but it will include Canada.

A short time ago, StateStreet very quietly beat them to the punch with the SPDR MSCI ACWI (All Country World Index) ex-U.S. ETF ( CWI), which also owns Canada but has more emerging-market exposure than EFA, close to 13% for CWI vs. less than 3% for EFA.

The country weights for the largest countries between the two funds are similar, as are some of the top holdings and sector weights. For example, each fund has a 29% weight in the financial sector. The two also have very similar weightings in the consumer discretionary and industrial sectors. Japan and the U.K. are the two largest countries, but in CWI, the two comprise 18%, compared with 23% in EFA. The two funds also share nine out of their respective top 10s in common at similar weightings.

Considering this, the question then becomes, what are the differences? One would be the several structural differences that could affect performance over longer periods of time. The first is mentioned above. CWI has much more emerging-market exposure, but it does tilt heavily to Asia. Brazil weighs in at 1.36% and Russia at 1.44%.

Another big difference is the average market cap. CWI has a much smaller bias, with an average cap of $6.82 billion (per the prospectus) vs. $37 billion for EFA. Given how the top-10 holdings are so similar, I am not sure whether this conceit can actually stand up, but such a big divergence in cap size could matter.

CWI has a 0.35% expense ratio and should yield 2.5%. The expense is the same as EFA (which I doubt is a coincidence), and the yield compares favorably with that of EFA, which yields 2.1%.

In the literature, StateStreet tells us that for one year ended Sept. 30, 2006, CWI's index returned 19.36%, which compares favorably, but not dramatically so, with EFA's return for the same time, which was 18.77%. I am surprised the extra emerging-market exposure was not more of a differentiator in performance.

On the whole, I doubt the fund will be much different from EFA, but it could be. It might be a better way for people who want all of their foreign exposure in one fund to get it, but maybe by only a slim margin. I would expect that over longer periods of time, the larger emerging-market exposure would add a little more return and volatility to the mix, but to be clear, the fund will never trade like the Turkish Investment Fund ( TKF) or any other hot potato.

The theme to this discussion is finding a better way to get foreign exposure on a broad scale. This would not be complete without a mention of the WisdomTree DIEFA High-Yielding Equity Index Fund ( DTH).

WisdomTree drew a lot of attention for claims that dividend weighting was better than cap weighting, and while it has only been out since June, DTH is up 25% while EFA is up 18%.

If you own EFA and plan to study CWI, you also need to study DTH. I think it behooves investors to be ETF-provider agnostic. Save for trusting that the provider is a viable going concern, who the provider is should not matter to you. You should own whatever you think is the best choice to capture, in this case broad foreign, and while DTH does not have as much emerging-market exposure as CWI, I think there is a good chance it will turn out to be better than CWI.

At the time of publication, Nusbaum held no positions in the stocks mentioned, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, Ariz., and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

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