When building a globally diversified portfolio, Schwab’s SWISX and SCHF stand out as top low-cost options for international exposure. Both funds target developed markets outside the U.S., but key differences in structure, strategy, and tax efficiency make them suited for different investor needs. This SWISX vs SCHF comparison breaks down performance, costs, holdings, and ideal use cases to help you decide which fund aligns with your financial goals.
SWISX vs SCHF: Core Differences Explained
Though often compared, SWISX (Schwab International Index Fund) and SCHF (Schwab International Equity ETF) have distinct characteristics:
- Fund Structure: SWISX is a traditional mutual fund, while SCHF is an exchange-traded fund (ETF). This impacts trading flexibility and settlement times.
- Index Tracking: SWISX follows the MSCI EAFE Index (Europe, Australasia, Far East), while SCHF tracks the FTSE Developed ex US Index. Both exclude U.S. and Canadian stocks.
- Trading Mechanics: SWISX prices once daily at 4 PM ET. SCHF trades like a stock throughout market hours with real-time pricing.
- Minimum Investment: SWISX requires no minimum in Schwab accounts. SCHF can be bought for the price of one share (~$35 as of 2023).
Performance and Cost Comparison
Historically, both funds deliver similar returns due to overlapping holdings in companies like Nestlé, Toyota, and Samsung. However, subtle variances emerge:
- Expense Ratios: Both charge ultra-low 0.06% fees—among the cheapest in the category.
- Tax Efficiency: SCHF’s ETF structure typically generates fewer capital gains distributions, making it preferable for taxable accounts.
- Dividend Yield: SCHF currently yields ~3.2% vs SWISX’s ~3.0%, reflecting slight index methodology differences.
- Tracking Error: SCHF shows marginally tighter index alignment due to ETF arbitrage mechanisms.
Over 5-year periods, performance diverges by less than 0.5% annually, emphasizing their core similarity.
Which Fund Should You Choose?
Your decision in the SWISX vs SCHF debate depends on three factors:
- Investment Style: Choose SWISX for automated dollar-cost averaging in retirement accounts (like IRAs). Opt for SCHF if you trade actively or want intraday flexibility.
- Account Type: Prioritize SCHF in taxable brokerage accounts for better tax treatment. SWISX works well in tax-advantaged accounts where capital gains aren’t a concern.
- Platform Preferences: SCHF is universally tradable across brokers. SWISX is ideal for Schwab-centric investors seeking seamless mutual fund integration.
Both exclude emerging markets—pair with SCHE for complete international coverage.
SWISX vs SCHF: Frequently Asked Questions
- Q: Are SWISX and SCHF identical in holdings?
A: No. While both cover developed markets, SCHF includes South Korea and weights sectors differently than SWISX’s MSCI-based approach. - Q: Which has lower costs long-term?
A: Both have 0.06% expense ratios. However, SCHF’s tax efficiency may save more in taxable accounts over decades. - Q: Can I hold both funds together?
A: It’s generally redundant. Their 85%+ overlap dilutes diversification benefits. Combine one with an EM or small-cap fund instead. - Q: Do these funds hedge currency risk?
A: No. Both are unhedged, exposing investors to foreign exchange fluctuations. - Q: How do dividends work?
A: SWISX pays quarterly dividends. SCHF pays quarterly with optional DRIP (Dividend Reinvestment Plan).
Ultimately, SWISX vs SCHF isn’t about “better” or “worse”—it’s about fit. SCHF offers tactical advantages for hands-on investors, while SWISX simplifies passive investing. Both deliver cost-effective access to 1,000+ international stocks, making them foundational pieces for any globally-minded portfolio. Consult a financial advisor to align your choice with tax strategy and risk tolerance.
