SWISX vs SFNNX: Comparing Schwab’s International Index Funds

SWISX vs SFNNX: Which International Fund Is Right for You?

Choosing between Schwab International Index Fund (SWISX) and Schwab Fundamental International Large Company Index Fund (SFNNX) can be challenging for investors seeking global diversification. Both funds offer exposure to international equities but employ distinct strategies. This guide breaks down their differences in performance, costs, and investment approaches to help you decide.

Overview of SWISX and SFNNX

Schwab International Index Fund (SWISX)

SWISX tracks the MSCI EAFE Index, covering developed markets outside the U.S. and Canada. Key features:

• Market-cap-weighted portfolio of 900+ stocks
• Focuses on Europe, Australasia, and the Far East
• 0.06% expense ratio
• Passive management strategy

Schwab Fundamental International Large Company Index Fund (SFNNX)

SFNNX follows the Russell RAFI Developed ex-U.S. Large Company Index, emphasizing fundamental metrics. Highlights:

• Selects stocks based on dividends, cash flow, and book value
• Holds 800+ companies
• 0.25% expense ratio
• Value-oriented approach

Key Differences Between SWISX and SFNNX

• Index Tracked: SWISX uses market-cap weighting; SFNNX uses fundamental factors.
• Geographic Exposure: SWISX has higher allocations to Japan (22%) and the UK (14%). SFNNX leans toward Europe (60%).
• Sectors: SWISX favors financials (20%) and industrials (14%). SFNNX overweight energy and utilities.
• Expense Ratio: SWISX costs 0.06% vs. SFNNX’s 0.25%.
• Performance: SWISX outperformed in 2020-2022 growth markets; SFNNX excels in value-driven cycles.

Who Should Invest in SWISX?

• Cost-conscious investors seeking broad international exposure
• Those prioritizing liquidity and low turnover
• Buy-and-hold investors comfortable with market-cap biases

Who Should Choose SFNNX?

• Value investors targeting undervalued companies
• Those seeking higher dividend yields (3.1% vs SWISX’s 2.8%)
• Investors comfortable with slightly higher fees for active-like strategy

FAQ: SWISX vs SFNNX

1. Which fund has lower fees?
SWISX (0.06% expense ratio) is cheaper than SFNNX (0.25%).

2. Does SFNNX outperform SWISX long-term?
SFNNX outperformed SWISX from 2010-2015 but lagged during growth-dominated markets post-2016.

3. Are these funds tax-efficient?
Both are tax-inefficient; hold in tax-advantaged accounts like IRAs.

4. Can I hold both funds together?
Yes—combining them balances growth and value exposure.

5. Do they hedge currency risk?
No—both are exposed to foreign currency fluctuations.

Conclusion

SWISX suits passive investors wanting low-cost developed market exposure, while SFNNX appeals to those betting on undervalued international stocks. Assess your risk tolerance and investment goals before choosing.