SWISX vs SCHF: Which International ETF Wins for Your Portfolio?

## SWISX vs SCHF: The Battle of International ETFs

Investors seeking global diversification beyond U.S. markets often compare Schwab’s SWISX and SCHF. Both target developed international equities but take different approaches. SWISX (Schwab International Index Fund) is a mutual fund tracking the MSCI EAFE Index, while SCHF (Schwab International Equity ETF) is an ETF following the FTSE Developed ex US Index. This 900-word analysis breaks down their differences to help you decide which aligns with your investment strategy.

## What is SWISX? In-Depth Look

SWISX is a low-cost mutual fund from Charles Schwab, established in 1997. It aims to replicate the MSCI EAFE Index, covering large- and mid-cap stocks across 21 developed markets in Europe, Australasia, and the Far East. Key features include:

– **Expense Ratio**: 0.06% (extremely low)
– **Holdings**: ~950 stocks with heavy weighting in Japan (22%), UK (15%), and France (12%)
– **Structure**: Traditional mutual fund (priced once daily)
– **Dividends**: Quarterly distributions with 100% qualified dividend income
– **Minimum Investment**: $1 for Schwab accounts, $0 for ETFs

SWISX excludes emerging markets, Canada, and small-cap companies, focusing purely on established economies.

## Understanding SCHF: ETF Structure & Strategy

SCHF is an exchange-traded fund launched in 2009, tracking the FTSE Developed ex US Index. It holds over 1,400 stocks across 24 developed countries, including South Korea (unlike SWISX). Notable characteristics:

– **Expense Ratio**: 0.06% (identical to SWISX)
– **Trading Flexibility**: Bought/sold like stocks throughout market hours
– **Geographic Exposure**: Japan (22%), UK (15%), Canada (8%), and Switzerland (7%)
– **Tax Efficiency**: ETF structure minimizes capital gains distributions
– **Accessibility**: No minimum investment beyond share price (~$38 as of 2023)

SCHF also omits emerging markets but includes Canada and South Korea—key differentiators from SWISX.

## Critical Differences: SWISX vs SCHF Compared

Performance varies slightly due to index differences. Over 5 years, SCHF returned 4.2% annually vs. SWISX’s 3.9% (as of 2023), partly because of SCHF’s Canadian exposure during commodity booms.

## Which Fund Should You Choose? 4 Decision Factors

1. **Market Coverage Preference**:
– Choose SCHF for Canadian/South Korean exposure
– Prefer SWISX for pure EAFE focus without these markets

2. **Trading Style**:
– Active traders favor SCHF for intraday flexibility
– Long-term holders may prefer SWISX’s set-and-forget mutual fund structure

3. **Tax Considerations**:
– Taxable accounts: SCHF’s ETF structure typically generates fewer capital gains
– Retirement accounts: Both work well due to tax-deferred growth

4. **Existing Portfolio**:
– If you already hold Canadian stocks, SWISX avoids overlap
– SCHF offers broader diversification within developed markets

## Performance & Risk Analysis

Both funds exhibit similar volatility (Beta ~0.9 vs S&P 500) and sector allocations favoring financials (20%), industrials (14%), and healthcare (12%). However:

– SCHF slightly outperformed in recent years due to:
– Exposure to resource-heavy Canadian markets
– Inclusion of South Korean tech giants like Samsung

– SWISX shows strength during European economic rebounds with heavier France/Germany weighting

Neither fund hedges currency risk, making both sensitive to USD fluctuations.

## FAQ: SWISX vs SCHF Answered

### 1. Can I hold both SWISX and SCHF together?
Yes, but significant overlap (85% common holdings) may create redundancy. Better to pair one with an emerging market ETF like SCHE for balanced global exposure.

### 2. Which has lower fees?
Both charge 0.06%—among the lowest globally. SCHF has minor trading commissions if not using Schwab.

### 3. Do these funds pay dividends?
Yes. Both yield ~3% annually, paid quarterly. SWISX dividends are 100% qualified (lower tax rate); SCHF averages 80-90% qualified.

### 4. Why does SCHF include Canada but SWISX doesn’t?
Index providers differ: MSCI classifies Canada as a separate North American market, while FTSE groups it with international developed economies.

### 5. Which is better for Roth IRAs?
Both excel in tax-advantaged accounts. SWISX allows automatic investing, while SCHF enables precise entry points—choose based on your contribution style.

## Final Verdict

SCHF edges out for most investors due to its broader holdings, real-time trading, and tax efficiency. SWISX remains ideal for hands-off investors committed to the traditional EAFE universe. Both deliver cost-effective international diversification—align your choice with geographic preferences and account types. Always consult a financial advisor to match selections with your risk profile.