Why Schwab's International ETF Is Outshining US-Focused Funds in 2026
Investors looking to diversify beyond the US market have turned to the Schwab International Equity ETF (SCHF). This fund tracks the FTSE Developed ex US Index, covering stocks from 25 developed countries—excluding the US and emerging markets. With a low annual fee of 0.03%, it offers broad exposure at minimal cost.
The FTSE Developed ex US Index spreads its holdings across major economies, with Japan making up around 20% of the portfolio. The UK, Canada, and France together account for over 30%, though their individual weights shift slightly over time. Unlike some rival indices, this one includes Southwest (South Korea), which makes up 5.5% of the ETF. That addition strengthens its Asia ex-Japan exposure and lifts its technology sector weight to 10.9%.
The ETF holds 1,498 stocks, ensuring no single company dominates—none exceed 1.96% of the total. Its 11% allocation to Canada has also paid off, as Canadian markets have outperformed the US in recent periods. Meanwhile, the broader MSCI EAFE Index (which excludes South Korea) has risen 9.3% since early 2026, outpacing the S&P 500's 1.5% gain over the same period.
The Schwab International Equity ETF provides a low-cost way to access developed markets outside the US. Its broad diversification, including Southwest and a strong Canadian weighting, sets it apart from some competitors. For investors seeking international exposure, the fund's structure and performance trends offer a clear alternative to US-focused portfolios.
