VT vs. SCHF: Which International ETF Is the Better Buy for Investors?

Investors looking to diversify beyond U.S. borders have two very different options to choose from with the Vanguard Total World Stock ETF (NYSEMKT:VT) and the Schwab International Equity ETF (NYSEMKT:SCHF). One aims to cover the entire global stock market in a single fund, while the other zeroes in on developed markets outside the U.S. Here's how the two compare on cost, income, and holdings.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Both funds are cheap by industry standards, but SCHF has the edge on price -- with a 0.03% expense ratio compared to VT's 0.06%. Income-focused investors will also appreciate SCHF's dividend yield of 2.95%, which is meaningfully higher than VT's 1.59%.

Performance & risk comparison

What's inside

VT tracks the FTSE Global All Cap Index, and holds 10,024 stocks spanning both developed and emerging markets -- including the U.S. Technology is its largest sector weighting at 31.1%, followed by financial services at 15.2% and industrials at 11.4%. Its top holdings include Nvidia (NASDAQ:NVDA) at 4.2%, Apple (NASDAQ:AAPL) at 3.8%, and Microsoft (NASDAQ:MSFT) at 2.8%. The fund was launched in 2008.

SCHF, by contrast, tracks the FTSE Developed ex US Index and holds 1,500 stocks -- deliberately excluding the United States. Its biggest sector weightings are financial services at 23.3%, industrials at 18.1%, and technology at 17.6%. Top holdings include Samsung Electronics (KOSE:A005930) at 3.3%, Sk Hynix (KOSE:A000660) at 2.8%, and ASML Holding (NASDAQ:ASML) at 2.1%. SCHF was launched in 2009.

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What this means for investors

The real decision here comes down to what role you want an international fund to play in your portfolio. VT is built to be a complete, low-maintenance solution -- own it, and you already have exposure to nearly every publicly traded company on Earth. That makes it a good fit for investors who want one fund to do everything.

SCHF plays a narrower role. Because it excludes U.S. stocks entirely, it's typically used by investors who already hold a separate U.S.-focused fund and want to fill in international exposure without duplicating what they already own. That structure also helps explain SCHF's higher yield: developed international markets, especially in Europe and Asia, have historically favored higher dividend payouts compared to U.S. companies.

In terms of performance, SCHF has beaten VT over the past year, but it's also seen a deeper peak-to-trough decline over the last five years -- which makes sense given that it's a more concentrated bet. VT's broader mix, including its built-in U.S. allocation, has helped smooth out some of that volatility, and the two funds have ended up with similar five-year returns despite taking different paths to get there.

Bottom line: both of these funds are solid options. Neither approach is inherently superior, and plenty of long-term investors end up using one of these ETFs for their international exposure -- either pairing a U.S. fund with SCHF for cost-efficient global coverage, or simplifying things with VT and calling it done.

Andy Gould has positions in Apple and Nvidia and has the following options: long January 2027 $125 calls on Nvidia and short January 2027 $125 puts on Nvidia. The Motley Fool has positions in and recommends ASML, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.