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Schwab International Equity ETF

SCHF:NYSEArca

equity ETF | passive | Schwab | Tracks FTSE Developed ex US Index (Net)

Market Price

US$25.43 (26 Jan 2026)

+34.53% (YoY)

NAV

US$25.18

+0.99% Premium

Yield

3.41%

Expense Ratio

0.03%

-93% vs Avg: 0.40%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF tracks large- and mid-capitalization companies in developed countries outside the United States. With an ultra-low expense ratio and significant AUM, it offers an efficient and highly liquid way to gain broad international equity exposure. The bull case projects NAV reaching US$28.96 (+15%) while the bear case suggests US$21.40 (-15%) over 12-18 months.

⚖️ Risk vs Reward

The underlying developed international equity holdings have shown robust performance recently, but valuations, while reasonable, warrant attention in a volatile global economic landscape. This ETF's broad diversification across geographies and sectors, including traditionally overlooked markets like Canada and South Korea, provides a comparative advantage against more concentrated international funds. The risk-reward profile is balanced, with potential upside driven by continued global economic recovery and currency strength, offset by macroeconomic headwinds and geopolitical uncertainties. The fund's low cost structure significantly enhances its long-term return potential relative to higher-fee alternatives.

🚀 Why SCHF Could Soar

• Continued Global Economic Recovery: Stronger-than-expected economic growth in developed ex-US economies could boost corporate earnings and drive equity prices higher by an estimated 10-15%.
• Attractive Valuations Relative to US Equities: International developed markets may be undervalued compared to the stretched valuations of some US counterparts, potentially leading to capital rotation and an additional 5-10% upside.
• Favorable Currency Tailwinds: A weaker US Dollar could enhance returns for US investors in international holdings, adding an estimated 3-7% to performance.

⚠️ What Could Go Wrong

• Persistent Inflation and Higher Rates: Stubborn inflation leading to prolonged high interest rates globally could depress equity valuations and curb economic growth, potentially leading to a 10-15% market correction.
• Geopolitical Instability: Escalation of existing geopolitical conflicts or emergence of new ones could disrupt global trade, supply chains, and investor confidence, causing a 5-10% market downturn.
• Recessionary Pressures: A global economic slowdown or recession, particularly in key developed markets, could severely impact corporate earnings and lead to a significant decline in equity prices, potentially 15-20%.

🏢 Fund Overview

What Are You Actually Buying

The Schwab International Equity ETF (SCHF) offers broad, low-cost exposure to large and mid-capitalization companies located in developed countries outside the United States.
The fund aims to track the FTSE Developed ex US Index (Net), which captures approximately the top 90% of the eligible universe of developed international market equities, encompassing a wide array of industries and countries.
This segment provides investors with diversified access to established international economies, including significant allocations to regions like Europe, Asia, and notably, countries such as Canada and South Korea, which some other international funds may exclude.
Investing in this market segment generally complements a U.S.-centric portfolio by offering geographical diversification and exposure to different economic cycles and corporate earnings drivers.

Market Dynamics & Outlook

Developed international equities have shown robust performance in late 2025 and early 2026, with the fund achieving a 34.47% NAV return for the 2025 calendar year.
Key drivers include improving global economic sentiment, potential for moderating inflation, and a rebound in corporate earnings outside the U.S.
The sector benefits from significant inflows into global equity funds, reflecting increased investor optimism for growth opportunities beyond domestic markets.
However, investors must navigate ongoing risks such as geopolitical tensions, currency fluctuations, and divergence in monetary policies among major central banks.

🎯 Why This Matters

Understanding the current momentum in developed international equities is crucial, as the asset class offers diversification from a U.S.-centric portfolio and exposure to mature, established economies. While recent performance has been strong, investors should be aware of ongoing global macroeconomic risks and currency volatility inherent in international investments. SCHF's low expense ratio and broad exposure make it an efficient vehicle for accessing this market segment.

📈 Valuation & Analysis

Historical Performance

YTD

+34.47%

Yearly Growth (3Y)

+18.06%

Yearly Growth (5Y)

+9.30%

Yearly Growth (10Y)

+8.78%

Current Valuation

The underlying holdings of SCHF trade at an aggregate Price-to-Earnings (P/E) ratio of 17.64 and a Price-to-Book (P/B) ratio of 2.09, both as of December 31, 2025. The ETF also offers a trailing 12-month distribution yield of 3.41%. These valuation metrics suggest that developed international equities, while having seen recent gains, may still offer reasonable value compared to some domestic counterparts, though a detailed historical comparison would provide further context. The current yield is attractive for income-seeking investors in this equity segment.

The Bull Case - Upside to

Continued Global Economic Recovery

Medium Probability

Stronger-than-expected economic growth in developed ex-US economies could boost corporate earnings and drive equity prices higher by an estimated 10-15% over the next 12-18 months, leading to a NAV of US$28.96.

Attractive Valuations Relative to US Equities

Medium Probability

International developed markets may be undervalued compared to the stretched valuations of some US counterparts. This valuation gap could trigger capital rotation into these markets, providing an additional 5-10% upside to NAV.

Favorable Currency Tailwinds

Low Probability

A potential weakening of the US Dollar against major international currencies could enhance returns for US investors in SCHF's holdings, contributing an estimated 3-7% to overall performance.

The Bear Case - Downside to

Persistent Inflation and Higher Rates

Medium Probability

Stubborn inflation leading to prolonged high interest rates globally could depress equity valuations and curb economic growth, potentially leading to a 10-15% market correction, bringing NAV down to US$21.40.

Geopolitical Instability

Medium Probability

Escalation of existing geopolitical conflicts or the emergence of new ones could disrupt global trade, supply chains, and investor confidence, causing a 5-10% market downturn.

Global Economic Slowdown

Low Probability

A broader global economic slowdown or recession, particularly in key developed markets, could severely impact corporate earnings and lead to a significant decline in equity prices, potentially 15-20%.

Risk/Reward Assessment

Looking at SCHF's current positioning, investors are presented with a balanced risk-reward profile within the developed international equity space. On the upside, a continuation of the global economic recovery, coupled with attractive valuations relative to the U.S., could drive solid performance. The potential for a weaker US Dollar also offers a favorable tailwind for US-based investors. However, a range of macroeconomic and geopolitical risks could challenge this optimistic outlook. Persistent inflation, the possibility of a global economic slowdown, or unexpected geopolitical events could lead to valuation compression and market volatility. For long-term investors seeking diversified international equity exposure at a very low cost, SCHF remains a compelling option, but patience and a tolerance for potential short-term fluctuations will be key.

Peer Comparison

• SCHF offers an ultra-low expense ratio of 0.03%, matching the cheapest options in its category and significantly undercutting many actively managed funds, translating to substantial long-term cost savings for investors. • With over US$57 billion in AUM, SCHF provides excellent liquidity, ensuring efficient trading with minimal bid-ask spreads, which is beneficial for both small and large investors. • The fund distinguishes itself by including exposure to both Canada and South Korea within its developed international markets mandate, offering a broader and potentially more diversified investment universe compared to some peer ETFs. • Its historical performance has been competitive within its category, demonstrating effective tracking of its underlying FTSE Developed ex US Index, making it a reliable core holding for international equity exposure.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
Schwab International Equity ETF (SCHF) ⭐	3.00%	US$58.0B	34.47%	18.06%	9.30%	3.41%
Vanguard FTSE Developed Markets ETF (VEA)	3.00%	US$193.3B	35.15%	17.94%	9.14%	3.21%
iShares MSCI EAFE ETF (EFA)	32.00%	US$73.8B	31.38%	17.07%	8.88%	2.87%
SPDR Portfolio Developed World ex-US ETF (SPDW)	3.00%	US$34.8B	34.74%	18.02%	8.85%	3.14%

🎯 Why This Matters

The valuation and peer analysis highlight SCHF as a highly cost-efficient and well-diversified option for developed international equity exposure. Its competitive performance and inclusion of a broader set of developed markets differentiate it. Investors should consider these factors when allocating to international equities, particularly if minimizing costs and achieving broad market representation are primary objectives.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	ASML	A	ASML Holding NV	Technology	2.0%
2	005930	S	Samsung Electronics Co Ltd	Technology	1.8%
3	ROG	R	Roche Holding AG	Healthcare	1.1%
4	HSBA	H	HSBC Holdings PLC	Financials	1.1%
5	NOVN	N	Novartis AG Registered Shares	Healthcare	1.0%
6	000660	S	SK Hynix Inc	Technology	1.0%
7	AZN	A	AstraZeneca PLC	Healthcare	1.0%
8	7203	T	Toyota Motor Corp	Consumer Cyclical	0.9%
9	RY	R	Royal Bank of Canada	Financials	0.9%
10	NESN	N	Nestle SA	Consumer Defensive	0.9%

Fund Mechanics

How It Works

The Schwab International Equity ETF (SCHF) is a passively managed exchange-traded fund that seeks to track, before fees and expenses, the total return of the FTSE Developed ex US Index (Net). This index is market-capitalization weighted and composed of large- and mid-capitalization companies in developed countries outside the United States, representing approximately 90% of the eligible universe. The fund invests at least 90% of its net assets in stocks, including depositary receipts, that comprise the index. The methodology provides broad, diversified exposure to developed international markets, including countries like Japan, the UK, Canada, and South Korea. The ETF undergoes regular rebalancing to maintain alignment with its underlying index, minimizing tracking error to its benchmark.

Holdings Breakdown

Number of Holdings

1498

Top 10 Concentration

1142.0%

Turnover Rate

400%

Category	Weight	Description
Financials	24.1%
Industrials	18.8%
Technology	12.5%
Healthcare	9.3%
Consumer Cyclical	8.3%
Basic Materials	7.3%
Consumer Defensive	6.2%
Energy	4.4%
Communication Services	3.6%
Utilities	3.3%
Real Estate	2.3%

Cost Efficiency

Expense Ratio

0.03%

Median Bid-Ask Spread

0.040%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2025	34.47%	31.87%	2.60%	N/A	N/A	N/A
2024	3.46%	5.37%	-1.91%	N/A	N/A	N/A
2023	18.28%	15.64%	2.64%	N/A	N/A	N/A
2022	-14.90%	-15.32%	0.42%	N/A	N/A	N/A
2021	11.42%	8.24%	3.18%	N/A	N/A	N/A

Annualized Return Since Inception

7.10%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
SCHF ⭐	Schwab International Equity ETF	Schwab	3.00%	US$58.0B	34.5%	18.1%	9.3%	3.41%	12.25%	1.02	0.040%
VEA	Vanguard FTSE Developed Markets ETF	Vanguard	3.00%	US$193.3B	35.1%	17.9%	9.1%	3.21%	N/A	N/A	N/A
EFA	iShares MSCI EAFE ETF	BlackRock	32.00%	US$73.8B	31.4%	17.1%	8.9%	2.87%	N/A	0.75	N/A
SPDW	SPDR Portfolio Developed World ex-US ETF	SPDR	3.00%	US$34.8B	34.7%	18.0%	8.8%	3.14%	N/A	N/A	N/A
Category Average			40.00%	—	30.4%	16.7%	8.1%	2.96%	—	0.95	—

Risk Metrics

Beta

0.86

Alpha

0.40

R-Squared

96.06

Standard Deviation

1 Year	3 Years	5 Years	10 Years
N/A	12.25%	N/A	N/A

Sharpe Ratio

1Y	3Y	5Y	10Y
N/A	1.02	N/A	N/A

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
N/A	N/A	-29.15%	N/A

Correlations

S&P 500

0.67

Liquidity & Trading

Volume

Avg Daily Shares

10,923,227

Avg Daily Dollar Volume

US$0.0M

Trend

stable

Bid-Ask Spread

Metric	Value
Median (Percent)	0.040%
Median (Dollar)	US$0.01
During Hours	N/A
At Close	N/A
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	0.99%
30-Day Average	0.47%
1-Year Average	N/A
Standard Deviation	N/A
Max Premium (1Y)	N/A
Max Discount (1Y)	N/A

Creation/Redemption Activity

Trend

increasing

Net Flows

Period	Net Flow
1 Month	US$0.0M
1 Quarter	US$0.0M
1 Year	US$0.0M

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.