Schwab International Small-Cap Equity ETF (ARCA: SCHC)

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Schwab International Small-Cap Equity ETF

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To pursue its goal, the fund generally invests in stocks that are included in the FTSE Developed Small Cap ex US Liquid Index. The index is comprised of small capitalization companies in developed countries outside the United States, as defined by the index provider. The index defines the small capitalization universe as approximately the bottom 10 percent of the eligible universe with a minimum free float capitalization of dollar 150 million. As of August 31, 2023, the index was composed of 2,142 stocks in 25 developed market countries.

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The conflict in Ukraine has evolved from grave tension to war.

On Thursday, President Joe Biden further condemned Russia’s actions in Ukraine, saying the White House is imposing new sanctions on four more major Russian banks, &#34;freezing every asset they have in America.&#34;

6 US ETFs With Significant Ukraine Exposure

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A Small-Cap ETF For Globe-Trotting Investors

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SCHA

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SCHE

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SCHO

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Schwab ETF Fees Hit Rock Bottom

The conflict in Ukraine has evolved from grave tension to war.
On Thursday,&nbsp;President Joe Biden&nbsp;further condemned&nbsp;Russia&rsquo;s actions in Ukraine, saying the White House&nbsp;is imposing new sanctions on four more major Russian banks, &quot;freezing every asset they have in America.&quot;
Latest Developments: Russian troops have reached the outskirts of Kyiv after launching a full-scale invasion of Ukraine from three directions. Troops are advancing from the north; from the east through Donetsk, Luhansk, Kharkiv and Sumy; and from Crimea in the south.
Geopolitical pressure in eastern Europe this week sent waves of volatility throughout global markets, most notably the Russian <a href="https://www.google.com/finance/quote/IMOEX:MCX">MOEX</a>, the main exchange in Moscow. The index is down 35.86% year-to-date.
See Also:&nbsp;<a href="https://www.benzinga.com/news/22/02/25795908/why-traders-need-to-watch-palladium-and-platinum-stocks-right-now" title="Why Traders Need To Watch Palladium And Platinum Stocks Right Now">Why Traders Need To Watch Palladium And Platinum Stocks Right Now</a>
The uncertainty isn&rsquo;t just tied to the eastern European states. The list below displays all U.S. listed equity ETFs that maintain significant exposure to stocks listed in Ukraine.
FlexShares Morningstar Emerging Markets Factor Tilt Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tlte#NYSE">TLTE</a>) measures the performance of stocks located in emerging countries across the world with increased exposure to small-capitalization and value stocks.&nbsp;
Vanguard FTSE All-World ex-US Small-Cap Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vss#NYSE">VSS</a>)&nbsp; Seeks to track the performance of a benchmark index that measures the investment return of stocks of international small-cap companies.
Price action: Down 8.82% year-to-date
Schwab International Small-Cap Equity (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schc#NYSE">SCHC</a>) The fund&rsquo;s goal is to track as closely as possible, before fees and expenses, the total return of the FTSE Developed Small Cap ex US Liquid Index.&nbsp;
Price action: Down 9.29% year-to-date
Vanguard European Stock Index Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vgk#NYSE">VGK</a>) Seeks to track the performance of the FTSE Developed Europe All Cap Index, which measures the investment return of stocks issued by companies located in the major markets of Europe.
Price action: Down 8.11% year-to-date
Vanguard Developed Markets Index Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vea#NYSE">VEA</a>) Seeks to track the investment performance of the FTSE Developed All Cap ex US Index.
Price action: Down 6.45% year-to-date
SPDR Portfolio Europe (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/speu#NYSE">SPEU</a>) Seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the STOXX Europe Total Market Index.
Price action: Down 8.47% year-to-date

While some market participants may be doubting the efficacy of investing in <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/05/13761673/us-equity-versus-the-world-theres-an-etf-for-that">stocks outside the U.S.</a>, some investors may want to consider contrarian viewpoints and visit some ex-U.S. developed markets.
For small-cap investors, the Schwab International Small-Cap Equity ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schc#NYSE">SCHC</a>) is a sensible way of adding some international diversity to portfolios.
<h3>What Happened</h3>
The Schwab International Small-Cap Equity ETF is up 10 percent year-to-date, performance that is mostly inline with the MSCI EAFE Index and other comparable developed markets large-cap benchmarks.
SCHC, which tracks the FTSE Developed Small Cap ex US Liquid Index, holds over 2,100 stocks, giving it a deeper bench than many domestic small-cap exchange traded funds.
One trait setting SCHC apart from rival funds tracking MSCI EAFE benchmarks is that the Schwab ETF features significant exposure to Canadian small-cap stocks.
&ldquo;While the portfolio excludes stocks from emerging markets, it still effectively diversifies stock-specific risk. Its 10 largest holdings account for only 4% of its assets,&rdquo; <a href="https://www.morningstar.com/articles/929907/this-smallcap-fund-provides-better-exposure-to-for.html">Morningstar said in a recent note</a>.
&ldquo;However, its country composition is biased toward the Canadian market, which makes it riskier than its average Morningstar Category peer. Canadian small-caps feature a heavy dose of companies in the materials and energy sectors. These types of companies are risky because of their exposure to volatile commodity prices, so they can add to the fund&rsquo;s risk.&rdquo;
<h3>Why It&#39;s Important</h3>
Country and sector weights are meaningful. Over the past three years, SCHC is trailing the MSCI EAFE Small Cap Index by more than 600 basis points. That index does not feature exposure to Canadian stocks.
Japan, Canada and the U.K. combine for over 48 percent of <a href="https://www.schwab.com/public/schwab/investing/investment_help/investment_research/etf_research/etfs.html?path=/Prospect/Research/etfs/portfolio.asp?symbol=SCHC">SCHC&#39;s geographic exposure</a>.
At the sector level, the fund is highly cyclical. It allocates 33.2 percent of its weight to the industrial and consumer discretionary sectors. Due to its significant Canadian exposure, the materials and energy sectors combine for 16 percent of SCHC&#39;s weight.
&ldquo;Overweighting these sectors relative to the category average has hurt this fund&rsquo;s performance,&rdquo; said Morningstar.
&ldquo;From its launch in January 2010 through April 2019 its return landed in the bottom quartile of the foreign small/mid-blend category. It was also one of the more-volatile funds in the category over this stretch.&rdquo;
<h3>What Happened</h3>
One source of allure with SCHC is an annual fee of 0.12 percent per year, or $12 on a $10,000 investment, making it one of the cheaper funds in the international small-cap category.
Perhaps surprisingly, the international <a href="https://www.benzinga.com/money/best-small-cap-etfs/">small-cap ETF</a> has been less volatile than the U.S.-focused Russell 2000 and S&amp;P SmallCap 600 indexes over the past three years.
Morningstar rates SCHC at Bronze.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/05/13761381/better-a-way-to-emerging-markets-virtue">A Virtuous EM ETF</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/05/13760675/there-are-a-lot-of-muni-bonds-in-this-new-etf">Marvelous Muni Bonds</a>

Discount broker Charles Schwab (NYSE: <a class="ticker" href="/stock/schw#NYSE">SCHW</a>), sponsor to some of the least expensive ETFs on the market, is making some of those funds even cheaper. In a filing with the <a href="http://www.sec.gov/Archives/edgar/data/1454889/000119312512398527/d403516d497.htm">Securities and Exchange Commission</a>, Schwab outlined fee cuts a wide array of its ETFs.

Among the Schwab funds with lower expense ratios will be two of the firm's most popular products. The Schwab U.S. Broad Market ETF (NYSE: <a class="ticker" href="/stock/schb#NYSE">SCHB</a>) will see its fee reduced to 0.04 percent per year from 0.06 percent. The annual expense ratio on the Schwab U.S. Large-Cap ETF (NYSE: <a class="ticker" href="/stock/schx#NYSE">SCHX</a>) goes to 0.04 percent from 0.08 percent. SCHB has $1.1 billion in assets under management while <a href="https://www.schwabetfs.com/summary.asp?symbol=SCHX">SCHX had $887.5 million in AUM at the end of August</a>.

The Schwab U.S. Large-Cap Growth ETF (NYSE: <a class="ticker" href="/stock/schg#NYSE">SCHG</a>), Schwab U.S. Large-Cap Value ETF (NYSE: <a class="ticker" href="/stock/schv#NYSE">SCHV</a>). Schwab U.S. REIT ETF (NYSE: <a class="ticker" href="/stock/schh#NYSE">SCHH</a>) and the Schwab U.S. Mid-Cap ETF (NYSE: <a class="ticker" href="/stock/schm#NYSE">SCHM</a>) will see annual fees reduced to 0.07 percent from 0.13 percent.

The Schwab U.S. Small-Cap ETF (NYSE: <a class="ticker" href="/stock/scha#NYSE">SCHA</a>) goes down three basis points to 0.1 percent from 0.13 percent. In the dividend space, Schwab slashed the expense ratio on the Schwab U.S. Dividend Equity ETF (NYSE: <a class="ticker" href="/stock/schd#NYSE">SCHD</a>) to 0.07 percent from 0.17 percent.

Schwab also reduced expenses on several of its international funds, including the Schwab International Equity ETF (NYSE: <a class="ticker" href="/stock/schf#NYSE">SCHF</a>), which is going to 0.09 percent from 0.13 percent. The Schwab International Small-Cap Equity ETF (NYSE: <a class="ticker" href="/stock/schc#NYSE">SCHC</a>) will now have an expense ratio of 0.2 percent down from 0.35 percent.

Interestingly, the Vanguard MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) has lost the title of cheapest emerging markets ETF. That honor now goes to the Schwab Emerging Markets Equity ETF (NYSE: <a class="ticker" href="/stock/sche#NYSE">SCHE</a>), which will now charge 0.15 percent compared with 0.25 percent in the past.

Fees on the Schwab U.S. TIPS ETF (NYSE: <a class="ticker" href="/stock/schp#NYSE">SCHP</a>) were cut in half to 0.07 percent from 0.14 percent. The Schwab Short-Term U.S. Treasury ETF (NYSE: <a class="ticker" href="/stock/scho#NYSE">SCHO</a>) goes to 0.08 percent from 0.12 percent while the Schwab Intermediate-Term U.S. Treasury ETF (NYSE: <a class="ticker" href="/stock/schr#NYSE">SCHR</a>) will now charge 0.1 percent compared with 0.12 percent in the past.

The Schwab U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/schz#NYSE">SCHZ</a>) also cut its fees in half to 0.05 percent from 0.1 percent while the Schwab U.S. REIT ETF (NYSE: <a class="ticker" href="/stock/schh#NYSE">SCHH</a>) will now charge 0.07 percent, down from 0.13 percent. 

All that on top of the fact that Schwab offers all of its ETFs on a commission-free basis to its clients.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

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While some general truth exists in the assertion that American investors should stick with U.S.-based investments for familiarity and performance reasons, the best international ETFs may provide a layer of intrigue for the adventurous.



First and foremost, diversification may be a value attribute heading into broader market uncertainty. With circumstances liable to shift in myriad directions, you don&rsquo;t necessarily want to be exclusively exposed to one sector. Instead, a balanced approach may yield superior results. As well, you can approach whatever lies ahead with greater confidence.



Second, the best international ETFs may provide superior value. Yes, the U.S. economy has performed exceptionally well given the circumstances. However, it&rsquo;s also possible that the bull market may be peaking. On the flipside, under-the-radar investments might get their chance to shine.



Of course, every investment carries risks. But given the present ebb and flow, the below ideas may offer the best international ETFs to buy for diversification.



<h2>BNY Mellon International Equity ETF (BKIE)</h2>


<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/06/etf-1600-1-300x169.png" alt="Piggy banks with coins in them that spell out ETF."><div>Source: Maxx-Studio / Shutterstock</div></div>


A broader, well-balanced idea for best international ETFs to buy for diversification, the BNY Mellon International Equity ETF (NYSEARCA:<a href="https://investorplace.com/stock-quotes/bkie-stock-quote/">BKIE</a>) falls under the foreign large blend category. According to its <a href="https://money.usnews.com/funds/etfs/foreign-large-blend/bny-mellon-international-equity-etf/bkie">prospectus</a>, the BKIE fund tracks the performance of the Morningstar Developed Markets ex-US Large Cap IndexSM. Basically, the ETF covers non-U.S. blue chips.



In terms of sector weighting, financial services runs tops at 21.29% of the total fund weight. That&rsquo;s followed by the industrials sector at 15.62% and healthcare at 12.92%. For the geographic breakdown, the Eurozone dominates at 28%. Further, Japan isn&rsquo;t too far behind at 22.7%, followed by Europe outside the Eurozone.



However, BKIE isn&rsquo;t the greatest outperformer. Since the beginning of the year, the ETF returned less than 4%. Compare that to the SPDR S&amp;P 500 ETF Trust (NYSEARCA:<a href="https://investorplace.com/stock-quotes/spy-stock-quote/">SPY</a>), which gained almost 16%. Still, some hidden value could exist here. Also, the expense ratio sits at 0.04%, well below the category average of 0.38%.



<h2>Schwab International Small-Cap Equity ETF (SCHC)</h2>


<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/01/shutterstock_1917075950-300x169.png" alt="ETF Investment index funds concept with letter wooden blocks and lots of different currencies, ETFs to buy. Emerging markets ETFs"><div>Source: Eviart / Shutterstock.com</div></div>


To add some risk to your prospective portfolio of the best international ETFs to buy for diversification, the Schwab International Small-Cap Equity ETF (NYSEARCA:<a href="https://investorplace.com/stock-quotes/schc-stock-quote/">SCHC</a>) deserves consideration. Per its <a href="https://money.usnews.com/funds/etfs/foreign-small-mid-blend/schwab-international-small-cap-eq-etf/schc">prospectus</a>, the investment seeks to track as closely as possible the total return of the FTSE Developed Small Cap ex US Liquid Index. As the name suggests, the index covers small-capitalization companies outside the U.S.



To be sure, you&rsquo;ll be tacking on more risk for the possibility of greater reward. For sector weightings, the industrials space dominates at 21.74% of total holdings. Coming in a relatively distant second place is the consumer cyclical sector at 11.97%, followed by financial services at 11.42%. Regarding geographic breakdown, Canada leads the field at 20.7%, followed by Japan (19%) and the Eurozone (18.1%).



Before you jump in, you should note that the SCHC returned less than 1% since the January opener. Still, the expense ratio sits at only 0.11%, below the category average of 0.29%.



<h2>iShares Asia 50 ETF (AIA)</h2>


<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/06/etf-1600-2-300x169.png" alt="Blocks that spell out ETF in front of jar with money and change."><div>Source: SHUN_J / Shutterstock</div></div>


With the Asian market presenting a questionable backdrop due to the <a href="https://www.foreignaffairs.com/china/chinas-economic-slowdown-was-inevitable">economic slowdown of China</a> along with ongoing and also escalating geopolitical tensions, the regional ecosystem may be too risky for most investors. At the same time, those seeking a contrarian view among the best international ETFs to buy for diversification may appreciate the iShares Asia 50 ETF (NASDAQ:<a href="https://investorplace.com/stock-quotes/aia-stock-quote/">AIA</a>).



According to its <a href="https://money.usnews.com/funds/etfs/pacific-asia-ex-japan-stk/ishares-asia-50-etf/aia">prospectus</a>, the AIA seeks to track the results of the S&amp;P Asia 50TM, which is composed of 50 of the largest Asian equities. Generally, the ETF will invest at least 80% of its assets in the component securities of the target index. Also, the other portion may be invested in certain futures, options and swap contracts. If you want your diversification regarding the best that Asia has to offer, this might be it.



In terms of sector weight, the biggest allocation unsurprisingly focuses on technology at 40.25%. In a distant second place is financial services at 21.03%, followed by communication services at 15.78%. The ETF is divided between Asia developed nations (62.4%) and Asian emerging markets (37.6%).



However, note that the expense ratio stands at 0.5%, just barely below the category average of 0.54%.



On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.&nbsp;The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com&nbsp;<a href="https://investorplace.com/corporate/investorplace-publishing-guidelines/" target="_blank">Publishing Guidelines</a>.
<div>A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.</div><h3>More From InvestorPlace</h3>
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The post <a href="https://investorplace.com/2023/11/the-3-best-international-etfs-to-consider-for-diversification/">The 3 Best International ETFs to Consider for Diversification</a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.

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Schwab International Small-Cap Equity ETF

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