International ETFs: SPDW and SCHF Both Offer Low Cost International Exposure

Schwab International Equity ETF (NYSEMKT:SCHF) and SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) both keep costs extremely low and provide broad developed-market exposure, but differ on fund size, yield, and risk-adjusted performance.

Both the Schwab International Equity ETF and the SPDR Portfolio Developed World ex-US ETF are designed as core international equity building blocks, tracking broad developed markets outside the United States. This comparison explores their similarities and differences across cost, recent returns, portfolio construction, risk, and trading characteristics to help investors decide which may fit their needs.

Snapshot (Cost & Size)

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

Both funds are among the most affordable in the category, each charging just 0.03% in annual expenses. SCHF edges out SPDW with a slightly higher dividend yield, offering a marginally greater payout for income-focused investors.

Performance & Risk Comparison

What's Inside

SPDR Portfolio Developed World ex-US ETF offers diversified exposure to developed-market equities outside the United States, holding 2,390 stocks and tilting toward financial services (23%), industrials (19%), and technology (11%). Its top holdings include Roche Holding Ag, Novartis Ag, and Toyota Motor Corp. With an 18.7-year history, SPDW aims to mitigate country-specific risk and serve as a core holding for international diversification.

Schwab International Equity ETF takes a very similar approach, focusing on developed markets and holding 1,499 stocks with a comparable sector mix: financial services (25%), industrials (18%), and technology (12%). The largest positions are Asml Holding Nv (NASDAQ:ASML), Samsung Electronics Ltd, and Roche. Neither fund incorporates quirks such as leverage, currency hedging, or ESG overlays, so both maintain plain-vanilla international exposure.

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What This Means For Investors

For investors seeking international exposure, both Schwab International Equity ETF (SCHF) and SPDR Portfolio Developed World ex-US ETF (SPDW) are ETFs worth considering. Here's what average investors should know about these two funds.

For starters, these two funds are quite similar. They both have an identical, near rock-bottom expense ratio of 0.03%, which means investors only pay $3 in annual fees for every $10,000 invested. Similarly, their volatility profiles are very similar. SCHF has a beta of 0.86, while SPDW has a beta of 0.88, making SPDW very slightly more volatile. Both funds have experienced a max drawdown of approximately -30%. Finally, their respective performance over the last five years has mirrored one another.

As for differences, perhaps the most obvious is in size. SCHF has nearly $58 billion in AUM, compared to $35 billion for SPDW. Yet, while this contrast is large, it shouldn't result in any significant difference in liquidity for investors buying or selling their shares.

In summary, a case can be made for either of these ETFs. For investors seeking international exposure, both SCHF and SPDW offer that exposure at a reasonable cost, with SCHF offering marginally higher yield.

Glossary

ETF (Exchange-traded fund): A fund that trades on stock exchanges like a stock, holding a basket of assets.
Expense ratio: The annual fee a fund charges investors, expressed as a percentage of assets invested.
Dividend yield: Annual dividends paid by a fund or stock divided by its current share price.
Beta: A measure of an investment’s volatility compared with the overall market, typically the S&P 500.
Developed markets: Economies considered mature and stable, such as Europe, Japan, Canada, and Australia.
AUM (Assets under management): The total market value of all assets a fund or manager oversees.
Max drawdown: The largest peak-to-trough decline in an investment’s value over a specific period.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Core holding: A foundational investment intended to be a long-term, central part of a portfolio.
Country-specific risk: Risk that economic, political, or regulatory events in one country hurt investment returns.
Currency hedging: Using financial strategies to reduce the impact of exchange-rate movements on investment returns.
ESG overlays: Investment screens or rules based on environmental, social, and governance criteria applied to a portfolio.

Jake Lerch has positions in Novartis. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.