Schwab International Equity ETF vs. Vanguard Total International Stock ETF: Two Low-Cost International ETFs, but One Offers More Growth Potential for the Next Decade

Schwab International Equity ETF (NYSEMKT:SCHF) focuses on developed international markets with a ultra-low expense ratio, while Vanguard Total International Stock ETF (NASDAQ:VXUS) provides broader exposure including emerging markets.

For investors seeking to diversify away from U.S. concentration, both the Vanguard and Schwab funds represent efficient, low-cost options. However, the choice between them often hinges on whether one wants exposure to the higher growth potential of emerging markets or prefers the relative stability of developed economies alone. This comparison examines how these geographic tilts impact performance and portfolio construction.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Schwab fund is the more affordable option with a 0.03% expense ratio, slightly undercutting the 0.05% fee of the Vanguard fund. While both maintain low costs by industry standards, investors focused on maximizing income may also notice that the Schwab fund provides a higher trailing distribution yield.

Performance & risk comparison

What's inside

The Schwab International Equity ETF focuses exclusively on developed markets. By tracking the FTSE Developed ex-US Index, it provides concentrated exposure to established international markets. Its portfolio weights are targeted with Financials at 25%, Industrials at 17.5%, and Information Technology at 16%. With around 1,400 holdings, its largest positions include Samsung Electronics (KOSE:A005930) at 3.12%, SK Hynix (NASDAQ: SKHY) at 2.57%, and ASML Holding (NASDAQ:ASML) at 2.39%. The fund launched in 2009 and has paid $0.84 per share over the trailing 12 months, which on its recent ~$26.8 share price works out to a 3.1% yield.

The Vanguard Total International Stock ETF has its focus on emerging markets, resulting in a much larger portfolio of roughly 8,600 holdings. The inclusion of smaller cap stocks and emerging regions offers a more exhaustive representation of the non-U.S. equity universe. It concentrates in Financials at 23%, Technology at 19%, and Industrials at 15%. Top positions include Taiwan Semiconductor Manufacturing (NYSE:TSM) at 4.3%, Samsung Electronics (OTC:SSNLF) at 2.3%, and SK Hynix at 1.7%. The fund launched in 2011 and has paid $1.98 per share over the trailing 12 months, which on its recent ~$82.5 share price works out to a 2.4% yield.

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Which looks like the better buy

This is a close one, but if I had to hold one of these ETFs for the next decade, I would choose the Vanguard Total International Stock ETF. Both funds have meaningful exposure to the artificial intelligence infrastructure buildout, but through somewhat different investments. Schwab holds established semiconductor leaders like Samsung Electronics, SK Hynix, and ASML, which supply memory chips and advanced manufacturing equipment critical to AI development.

Vanguard owns these same companies but adds Taiwan Semiconductor Manufacturing, a leading producer of advanced AI chips. This gives Vanguard exposure to another critical part of the semiconductor supply chain rather than an entirely different investment theme.

The more important distinction is geographic diversification. Schwab focuses on developed markets, providing exposure to established economies alongside a higher dividend yield and slightly lower expenses. Vanguard extends into emerging markets, such as China and India, offering access to additional long-term growth opportunities. This broader reach into emerging markets brings greater risks but, for investors building an international portfolio over the next decade, Vanguard looks like the better buy.

RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.