^GSPC -0.62% The Schwab International Equity ETF (NYSEMKT:SCHF) provides exposure to developed international markets with lower costs, while Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) targets developing nations with a significant technology tilt.
Investors seeking to diversify beyond U.S. borders often choose between the stability of developed economies and the growth potential of emerging ones. Both the Schwab International Equity ETF and the Schwab Emerging Markets Equity ETF offer broad, low-cost access to international stocks. Still, the ETFs differ in their geographic focus and risk profiles.
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Schwab International Equity ETF is the more affordable option with a 0.03% expense ratio. It also offers a higher payout, providing a 3.1% yield, whereas the Schwab Emerging Markets Equity ETF costs 0.06% and yields 2.6%.
Schwab International Equity ETF tracks the total return of the FTSE Developed ex US Index. Its largest positions include Samsung Electronics at 3.23% and SK Hynix at 2.68%. The fund holds 1,447 securities, and its portfolio is led by financial services at 25%, industrials at 18%, and technology at 16%. It was launched in 2009 and has no structural quirks. Schwab International Equity ETF has paid $0.84 per share over the trailing 12 months, which, at its recent ~$27.59 share price, works out to a 3% yield.
Schwab Emerging Markets Equity ETF mirrors the FTSE Emerging Index. Its top holdings include Taiwan Semiconductor Manufacturing at 18.11%, Tencent Holdings at 3.10%, and Alibaba at 2.34%. This fund is more diversified, with 2,233 holdings, but it is heavily concentrated in technology at 35%, followed by financial services at 20% and consumer cyclical at 9%. It was launched in 2010 and also carries no structural quirks. Schwab Emerging Markets Equity ETF has paid $0.95 per share over the trailing 12 months, which, on its recent ~$37.27 share price, works out to a 2.6% yield.
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The SCHF is the better buy. It has delivered better returns across a full market cycle over the past five years, encompassing the 2022 bear market. It also offers a higher dividend yield, a lower max drawdown, and greater liquidity.
Compared to the benefits of SCHF, there's not much the SCHE has to offer. SCHF even offers half the expense ratio of the emerging markets version.
Overall, there are clear advantages in the SCHF, making it the better international ETF to buy.
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SCHF vs. SCHE: Which International ETF Is the Better Buy? was originally published by The Motley Fool
