Which International ETF Is the Better Buy: Schwab's Developed Markets SCHF or iShares' Emerging Markets IEMG?

Choosing between the Schwab International Equity ETF (NYSEMKT:SCHF) and the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) often comes down to an investor's preference for established markets versus growth-oriented developing nations.

While both provide exposure to companies outside the United States, they diverge significantly in their sector concentrations, fee structures, and historical volatility profiles. Developed economies often provide established corporate governance and stability, whereas emerging markets may offer higher growth potential alongside increased volatility. This comparison looks at the data to see how these two international funds differ.

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.

For investors prioritizing low overhead, the Schwab fund is considerably more affordable with an expense ratio of 0.03%, compared to 0.09% for the iShares fund. Additionally, the Schwab fund offers a higher trailing-12-month payout, providing a 3% yield versus 2.2% for its emerging markets counterpart.

Performance & risk comparison

What's inside

Schwab International Equity ETF allocates its portfolio across developed international markets, emphasizing financial services at 26%, industrials at 18%, and technology at 15%. Its largest positions include Samsung Electronics (KOSE:A005930) at 2.86%, ASML Holding (NASDAQ:ASML) at 2.35%, and SK Hynix (KOSE:A000660) at 2.04%. The fund holds 1,490 stocks and has $69.4 billion in assets under management (AUM). It was launched in 2009. Schwab International Equity ETF has paid $0.84 per share over the trailing 12 months, which on its recent ~$28.49 share price works out to a 3% yield.

The iShares Core MSCI Emerging Markets ETF focuses on developing economies, which results in a significant 39% concentration in technology. Its largest positions include Taiwan Semiconductor Manufacturing (TWSE:2330) at 13.38%, Samsung Electronics at 6.12%, and SK Hynix at 4.25%. The fund is much more diversified by count with 2,862 holdings and has $158.6 billion in AUM. It was launched in 2012. iShares Core MSCI Emerging Markets ETF has paid $1.80 per share over the trailing 12 months, which on its recent ~$81.29 share price works out to a 2.2% yield.

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Which looks like the better buy

International stocks have delivered some of their strongest returns in years, rewarding investors who looked beyond U.S. borders. A weakening dollar, attractive valuations, and improving economic conditions across Europe and Asia drove a broad rally that caught many domestically focused investors off guard. Both SCHF and IEMG captured gains during that period, but they operate in very different parts of the world with very different levels of risk.

Here's the key difference: SCHF holds companies across developed markets in Europe, Japan, Australia, and Canada, which have stable currencies, established legal systems, and mature corporate governance. IEMG is focused on China, India, Taiwan, and South Korea, where growth rates outpace developed markets but so do political risk and currency volatility.

SCHF charges less than a third of what IEMG does and yields more, making it the lower-cost, lower-risk entry point into international investing. If you want international diversification without emerging market complexity, SCHF is the more practical starting point. IEMG is the stronger choice for those specifically seeking higher growth potential from developing economies and who are comfortable accepting additional volatility to get there.

Sara Appino has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.