Investors seeking to diversify their investment portfolios should consider broad international exchange traded funds, and a number of offerings also come with extremely cheap fees.
The Schwab International Equity ETF (NYSEArca: SCHF) is the cheapest international-equity ETF on the market. SCHF covers the FTSE Developed ex-US index, which is comprised of over 1,200 large- and mid-cap stocks taken from developed Europe, Canada, Asia and Australia, with a currently heavy country-focus on Japan and the United Kingdom.
Being mindful of fees has helped wealthier investors save on costs in investing over the long-term. Through cheap index-based ETF options, any long-term investor can also save on fees, paying expense ratios that are comparable to institutional fund share classes.
“Schwab International Equity’s 0.07% expense ratio makes it one of the cheapest ETFs in the foreign large-blend Morningstar Category. Its broad, market-cap-weighted exposure to large- and mid-cap stocks effectively diversifies company-specific risk and promotes low turnover,” according to Morningstar, which has a silver rating on SCHF.
In October, SCHF’s annual fee was lowered as part of a broader batch of ETF fee cuts by Schwab.
Schwab currently offers the cheapest U.S.-listed ETFs on the market, including the Schwab U.S. Large-Cap ETF (NYSEArca: SCHX) and Schwab U.S. Broad Market ETF (NYSEArca: SCHB), which both come with a 0.03% expense ratio.
Charles Schwab has also been growing its ETF business through commission-free ETF trades on its ETF OneSource platform, which provides free trades on over 200 ETFs from 16 fund providers, including Schwab’s own suite of ETFs.
SCHF “is well diversified in terms of country exposure, with stocks from 24 foreign developed markets (the inclusion of South Korea and Canada in the portfolio creates some notable differences in country exposure compared with funds that do not track a FTSE index as well as the category average). We believe the fund’s sizable cost advantage should give it an edge over the long term: This advantage helped it outperform the category average by 10 basis points annualized from its inception in November 2009 through September 2016,” adds Morningstar.
Home to $7.7 billion in assets under management, SCHF allocates over 38% of its combined weight to Japan and the U.K. France, Germany and Canada combine for over 24% of the ETF’s geographic lineup.
Financial services and industrial stocks combine for 36% of the fund’s weight with consumer discretionary and staples names combining for almost 23%.