Investors seeking global diversification often turn to international index funds like Schwab International Index Fund (SWISX) and Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). Both funds offer exposure to non-U.S. markets but differ in strategy, costs, and geographic focus. This guide breaks down their key differences to help you choose the right option.
## What Is SWISX? Overview of Schwab International Index Fund
SWISX is a low-cost mutual fund from Charles Schwab that tracks the MSCI EAFE Index. This index includes stocks from 21 developed markets outside the U.S. and Canada, such as Japan, the UK, and Germany.
Key features of SWISX:
– **Expense Ratio**: 0.06% (extremely low-cost)
– **Holdings**: Over 1,300 stocks
– **Market Focus**: Exclusively developed markets
– **Inception Date**: 1997
– **Dividends**: Paid quarterly
## What Is VTIAX? Overview of Vanguard Total International Stock Index Fund
VTIAX is Vanguard’s flagship international fund, tracking the FTSE Global All Cap ex US Index. It covers both developed and emerging markets, including countries like China, Brazil, and India.
Key features of VTIAX:
– **Expense Ratio**: 0.11%
– **Holdings**: Over 7,900 stocks
– **Market Focus**: 75% developed, 25% emerging markets
– **Inception Date**: 2010
– **Dividends**: Paid quarterly
## SWISX vs VTIAX: 6 Key Differences Compared
### 1. Geographic Exposure
– **SWISX**: Limited to developed markets (Europe, Australasia, Far East).
– **VTIAX**: Includes emerging markets (e.g., China, India) alongside developed nations.
### 2. Number of Holdings
– **SWISX**: ~1,300 stocks
– **VTIAX**: ~7,900 stocks
### 3. Expense Ratios
– **SWISX**: 0.06% (lower cost)
– **VTIAX**: 0.11% (still low but higher than SWISX)
### 4. Market Capitalization
– **SWISX**: Focuses on large- and mid-cap companies.
– **VTIAX**: Includes small-cap stocks for broader diversification.
### 5. Historical Performance
Over the past decade, VTIAX has shown slightly higher volatility due to emerging market exposure, while SWISX’s returns closely mirror developed economies. However, performance varies annually based on regional trends.
### 6. Minimum Investment
– **SWISX**: No minimum for Schwab account holders.
– **VTIAX**: $3,000 minimum initial investment.
## Which Fund Is Right for You?
– **Choose SWISX if**: You want ultra-low costs, prefer avoiding emerging markets, or have a small portfolio.
– **Choose VTIAX if**: You seek comprehensive global exposure, can meet the $3,000 minimum, and want small-cap diversification.
## FAQ: SWISX vs VTIAX
### 1. Does SWISX include emerging markets?
No. SWISX only covers developed markets in Europe, Asia, and Australasia.
### 2. Is VTIAX more diversified than SWISX?
Yes. VTIAX holds 6x more stocks and includes small-cap companies and emerging markets.
### 3. Which fund has better long-term returns?
Performance depends on market cycles. VTIAX may outperform when emerging markets rally, while SWISX could lead during developed market booms.
### 4. Are these funds tax-efficient?
Both are relatively tax-efficient, but VTIAX’s emerging market holdings may generate higher dividend taxes.
### 5. Can I invest in both SWISX and VTIAX?
Yes. Pairing SWISX with an emerging markets fund can mimic VTIAX’s exposure at a lower cost.
## Final Thoughts
SWISX and VTIAX both provide cost-effective international diversification. SWISX suits investors prioritizing low fees and developed markets, while VTIAX offers broader global exposure. Assess your risk tolerance and geographic preferences to decide.
