Choosing between SWISX and SCHF can significantly impact your international investment strategy. Both are low-cost, diversified funds from Charles Schwab targeting developed markets outside the U.S., but key structural differences affect taxes, trading flexibility, and exposure. This comprehensive comparison breaks down their nuances to help you decide which aligns best with your financial goals.
- What is SWISX?
- Key Features of SWISX:
- What is SCHF?
- Key Features of SCHF:
- SWISX vs SCHF: 5 Critical Differences
- Which Fund Should You Choose?
- Frequently Asked Questions
- Can I hold both SWISX and SCHF together?
- Which fund has better performance historically?
- Are emerging markets included?
- How do dividends compare?
- Which is better for IRAs?
What is SWISX?
SWISX (Schwab International Index Fund) is a mutual fund tracking the MSCI EAFE Index. Launched in 1997, it provides exposure to large- and mid-cap stocks across 21 developed markets in Europe, Australasia, and the Far East – excluding the U.S. and Canada. With a 0.06% expense ratio and no minimum investment for Schwab account holders, it’s favored for automated investing.
Key Features of SWISX:
- Structure: Traditional mutual fund
- Index Tracked: MSCI EAFE (Europe, Australasia, Far East)
- Holdings: ~950 stocks (e.g., Nestlé, Toyota, ASML)
- Trading: Priced and traded once daily after market close
- Tax Efficiency: Lower due to capital gains distributions
What is SCHF?
SCHF (Schwab International Equity ETF) is an exchange-traded fund following the FTSE Developed ex US Index. Introduced in 2009, it covers over 1,400 large- and mid-cap companies across 24 developed countries – including Canada, which SWISX excludes. Its 0.06% expense ratio and intraday tradability make it ideal for tactical investors.
Key Features of SCHF:
- Structure: Exchange-Traded Fund (ETF)
- Index Tracked: FTSE Developed ex US Index
- Holdings: ~1,400 stocks (e.g., Samsung, Novartis, Shell)
- Trading: Bought/sold like stocks during market hours
- Tax Efficiency: Higher due to in-kind creation/redemption
SWISX vs SCHF: 5 Critical Differences
| Factor | SWISX | SCHF |
|---|---|---|
| Geographic Coverage | 21 countries (excludes Canada) | 24 countries (includes Canada) |
| Trading Flexibility | End-of-day pricing only | Real-time intraday trading |
| Tax Efficiency | Distributes annual capital gains | Rare capital gains distributions |
| Investment Minimum | $0 at Schwab | 1 share (~$35) |
| Index Methodology | Market-cap weighted (MSCI) | Free-float adjusted (FTSE) |
Which Fund Should You Choose?
Your decision hinges on three key factors:
- Investment Style: Choose SWISX for dollar-cost averaging in retirement accounts. Opt for SCHF if you trade actively or want tax efficiency in taxable accounts.
- Canadian Exposure: SCHF provides 6-8% allocation to Canada (e.g., RBC, Shopify). SWISX completely excludes it.
- Cost Structure: While both charge 0.06%, SCHF avoids transaction fees at most brokers. SWISX may incur fees outside Schwab platforms.
Pro Tip: In taxable brokerage accounts, SCHF’s ETF structure typically generates 0.3-0.5% less annual tax drag than SWISX.
Frequently Asked Questions
Can I hold both SWISX and SCHF together?
Yes, but it causes significant overlap. Both cover similar developed markets, with 85% identical holdings. Combining them is generally redundant unless intentionally overweighting specific regions.
Which fund has better performance historically?
Performance varies by period due to index differences. Over 10 years, SCHF slightly leads (7.1% vs 6.9% CAGR) partly from Canadian exposure. However, past performance doesn’t guarantee future results.
Are emerging markets included?
No. Both exclude emerging markets. For EM exposure, consider Schwab’s SCHE (ETF) or SFENX (mutual fund) alongside either SWISX or SCHF.
How do dividends compare?
SCHF yields ~3.2% versus SWISX’s ~3.0%. SCHF pays quarterly; SWISX pays annually. Both qualify for foreign tax credits.
Which is better for IRAs?
SWISX is often preferred in IRAs due to no capital gains tax concerns and easy automated investing. SCHF works well too but requires manual share purchases.
Ultimately, SWISX suits hands-off investors prioritizing simplicity, while SCHF benefits tactical traders seeking flexibility. Both deliver cost-effective international diversification – your specific needs determine the optimal choice.
