Schwab International Equity ETF

SCHF

Market cap $53.5B

IEFA charges a higher fee but delivers a slightly higher dividend yield than SCHF SCHF edges out IEFA on recent returns and shows a slightly smaller five-year drawdown IEFA holds more stocks and offers broader sector diversification, but both funds share similar top holdings

Stretched U.S. valuations and AI bubble fears have investors looking abroad and are driving interest in international equity and emerging market ETFs.

Investors can eye global equity funds as AI bubble fears, U.S. market risks and Fed easing fuel demand for international diversification.

Schwab International Equity ETF (SCHF) offers diversified exposure to developed markets outside the U.S., focusing on Britain, Japan, and Europe. The Japanese exposure and allocation to large Financials have me interested in particular. I see pricey US stocks and shutdown headwinds as a reason to look outside domestic borders.

Global equity funds saw $10.65B inflows as Fed rate cut bets, a weak dollar and diversification needs drive investors abroad.

SCHF offers low-cost, diversified exposure to developed international equities, excluding the US, with strong liquidity and a 3bps expense ratio. The ETF tracks the FTSE Developed ex-US Index, minimizing single-stock risk and providing broad sector and country diversification. Risks include exposure to tariffs, currency, and other macroeconomic factors, but the index's structure helps diversify these risks.

As far as the top exchange traded fund (ETF) providers are concerned, Schwab has to be among the top picks for most long-term investors.

Heavy exposure to Japan in the Schwab International Equity ETF poses potential risks due to emerging issues in the Japanese market, prompting a reassessment of my earlier outlook. The SPDR® Portfolio Europe ETF offers broad European diversification, low fees (0.07%), and a solid dividend yield, making it an attractive international alternative. SPEU's sector and country allocations reduce concentration risk, with strong representation in the UK, France, and Germany.

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The U.S. remains the dominant global economic power, but ongoing trade tensions may threaten its long-term leadership. I continue to invest in American businesses, but believe diversifying internationally is prudent for long-term wealth building. Uncertainty from U.S. trade policies could prompt other nations to unify and reduce reliance on America, shifting global dynamics.