iShares’ IXUS vs. Schwab’s SCHE

The Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) and the iShares Core MSCI Total International Stock ETF (NASDAQ:IXUS) differ most in geographic reach, recent performance, and sector makeup, while matching each other on cost.

Both SCHE and IXUS aim to provide international equity exposure, but their scopes are distinct. SCHE focuses exclusively on emerging markets, while IXUS spans both developed and emerging markets outside the United States.

This comparison examines their cost, recent returns, risk, and portfolio characteristics to help investors decide which may align better with their global allocation goals.

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

Both funds are equally affordable, charging a 0.07% expense ratio, but IXUS offers a slightly higher dividend yield at 3.0% compared to SCHE’s 2.7% — a modest difference that could appeal to those seeking more income from international equities.

IXUS tracks a broad index of non-U.S. equities, offering exposure to more than 4,100 holdings across developed and emerging markets. Its largest sector allocations are Financial Services (21%), Industrials (15%), and Basic Materials (13%).

The top holdings include Taiwan Semiconductor Manufacturing at 3.61%, Samsung Electronics at 1.64%, and ASML Holding at 1.30%. The fund’s 13.4-year history adds to its appeal for those seeking long-term international diversification.

SCHE, by contrast, is concentrated solely on emerging markets, with a notable tilt toward Technology (25%), Financial Services (22%), and Consumer Cyclical (12%). Its top holdings are Taiwan Semiconductor Manufacturing at 14.75%, Tencent Holdings at 3.85%, and Alibaba Group at 3.11%, reflecting greater weight in a handful of large Asian tech firms. Neither fund employs unique structural quirks or overlays.

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Choosing between the Schwab Emerging Markets Equity ETF (SCHE) and the iShares Core MSCI Total International Stock ETF (IXUS) comes down to what kind of international exposure you’re looking for.

SCHE’s focus on emerging markets offers greater growth potential, but at a higher level of volatility. The fund’s larger percentage of holdings in the tech sector amplifies this. Artificial intelligence can supercharge the performance of these stocks, or lead to upheaval as AI disrupts some business models. The ETF’s exposure solely to emerging markets also adds a greater level of geopolitical risk.

IXUS is a truly international ETF, since it covers both developed and emerging markets. The fund offers broader diversification through its over 4,000 holdings, and its much larger AUM delivers greater liquidity. This provides larger stability than SCHE, but at the cost of lower growth potential. The fund is better than SCHE for investors who want to hold an ETF for the long term and prefer a “set it and forget it” mentality.

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Robert Izquierdo has positions in ASML, Alibaba Group, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Better International ETF: iShares’ IXUS vs. Schwab’s SCHE was originally published by The Motley Fool