SWISX vs SCHF: Which International Fund Fits Your Investment Goals?
When building a diversified portfolio, international equity exposure is crucial. Two popular Schwab funds—SWISX (Schwab International Index Fund) and SCHF (Schwab International Equity ETF)—offer low-cost access to developed markets outside the U.S. But which is better for your strategy? Let’s break down their differences.
What Is SWISX?
SWISX is a mutual fund tracking the MSCI EAFE Index, covering stocks from Europe, Australasia, and the Far East. Key features include:
- Structure: Mutual fund (priced once daily at NAV)
- Expense Ratio: 0.06%
- Minimum Investment: $1 (at Schwab)
- Holdings: ~1,400 stocks, including Nestlé, Toyota, and Novartis
What Is SCHF?
SCHF is an ETF tracking the FTSE Developed ex US Index. Highlights:
- Structure: ETF (trades intraday like a stock)
- Expense Ratio: 0.06%
- Minimum Investment: 1 share (~$35 as of 2023)
- Holdings: ~1,500 stocks, with South Korean equities included (unlike SWISX)
Key Differences Between SWISX and SCHF
- Index Tracking: SWISX follows MSCI EAFE; SCHF follows FTSE Developed ex US (includes South Korea).
- Tax Efficiency: SCHF’s ETF structure reduces capital gains taxes vs SWISX’s mutual fund setup.
- Trading Flexibility: SCHF trades throughout the day; SWISX settles after market close.
- Dividend Yield: SCHF yields ~3.1% vs SWISX’s ~2.8% (varies annually).
Performance Comparison
Over the past 5 years, both funds have delivered similar returns, with slight variances:
- 2022: SWISX -14.2%, SCHF -14.0%
- 2021: SWISX +11.3%, SCHF +9.8%
- 3-Year CAGR: Both ~4.5% (as of 2023)
Tax Efficiency and Costs
- SWISX: May incur capital gains distributions, less ideal for taxable accounts.
- SCHF: Tax-efficient due to in-kind redemptions; better for non-retirement portfolios.
Which Fund Is Right for You?
- Choose SWISX If: You prefer mutual funds, automate investments, or start with small amounts.
- Choose SCHF If: You prioritize tax efficiency, intraday trading, or exposure to South Korea.
SWISX vs SCHF: FAQ
1. Are SWISX and SCHF good for long-term holdings?
Yes—both offer low-cost diversification, suitable for buy-and-hold investors.
2. Can I hold both funds together?
Unnecessary due to significant overlap. Pick one based on structure and regional exposure.
<strong3. Which fund has lower fees?
Both charge 0.06%, but SCHF may save on trading costs and taxes over time.
4. How do dividends work?
SWISX pays dividends annually; SCHF distributes quarterly. Both reinvest automatically if enabled.
5. Is SCHF riskier than SWISX?
Risk profiles are nearly identical, though SCHF’s inclusion of South Korea adds minor diversification.
