SWISX vs VXUS: A Head-to-Head Comparison
Investors seeking international stock exposure often debate between Schwab International Index Fund (SWISX) and Vanguard Total International Stock ETF (VXUS). Both funds offer low-cost access to global markets, but critical differences in strategy, composition, and structure could impact your portfolio. Let’s break down these two popular options.
What Is SWISX?
The Schwab International Index Fund (SWISX) is a mutual fund tracking the MSCI EAFE Index, covering developed markets outside North America. Key features include:
- Expense Ratio: 0.06%
- Holdings: ~1,400 large- and mid-cap stocks
- Regions: Europe (63%), Asia/Pacific (26%), Middle East (11%)
- No emerging markets exposure
- Minimum Investment: $1
What Is VXUS?
The Vanguard Total International Stock ETF (VXUS) tracks the FTSE Global All Cap ex US Index, offering broader global exposure:
- Expense Ratio: 0.07%
- Holdings: ~8,500 stocks
- Regions: Developed (75%) and emerging markets (25%)
- Includes small-cap stocks
- No minimum investment
Key Differences Between SWISX and VXUS
- Market Coverage: SWISX excludes emerging markets; VXUS includes 25%
- Asset Size: VXUS ($63B AUM) vs SWISX ($22B AUM)
- Structure: SWISX (mutual fund) vs VXUS (ETF)
- Tax Efficiency: VXUS’s ETF structure minimizes capital gains distributions
- Trading Flexibility: VXUS trades intraday; SWISX settles daily
Performance Comparison
Over the past 5 years (2018-2023):
- SWISX: 4.2% annualized return
- VXUS: 3.8% annualized return
SWISX’s developed markets focus outperformed during periods of emerging markets volatility. However, VXUS showed stronger recovery during 2020-2021 emerging markets rallies.
Which Fund Should You Choose?
Choose SWISX If:
- You want pure developed markets exposure
- You prefer mutual fund simplicity
- You’re a Schwab platform user
Choose VXUS If:
- You want emerging markets diversification
- You prioritize tax efficiency
- You value intraday trading
FAQ Section
1. Which fund has lower fees?
SWISX (0.06%) edges out VXUS (0.07%), but the difference is negligible for most investors.
2. Do these funds pay dividends?
Yes. Both pay quarterly dividends, with SWISX yielding 2.9% and VXUS 3.1% (2023 figures).
3. Can I hold both funds together?
Yes, but you’ll overlap in developed markets. Pair with an emerging markets fund for better diversification.
4. Which is better for retirement accounts?
SWISX’s mutual fund structure works well for automatic investments in IRAs. VXUS is ideal for taxable accounts due to ETF tax benefits.
5. How do currency fluctuations affect these funds?
Both are USD-denominated but hold foreign stocks. SWISX hedges some currency risk; VXUS has full currency exposure.
Final Verdict
SWISX and VXUS both provide cost-effective international exposure but cater to different strategies. Conservative investors may prefer SWISX’s developed markets stability, while those seeking comprehensive global exposure might favor VXUS. Consider your risk tolerance, tax situation, and investment platform when choosing.
