Why Schwab's International ETF Is Outshining U.S. Stocks in 2026

The Schwab International Equity ETF (SCHF) has drawn attention for its broad exposure to global stock markets outside the U.S. Tracking the FTSE Developed ex US Index, the fund includes stocks from 25 developed countries, with a notable tilt toward Japan, the UK, and Canada. Recently, its performance has stood out as international stock markets outpace U.S. gains in early 2026.

The ETF holds 1,498 stocks from over a dozen countries, ensuring no single company dominates its portfolio—none exceed a 1.96% weight. Its largest country allocations are Japan (20%), followed by the UK and Canada, which together with France account for over 30% of the fund. Canada's weighting, at nearly 11%, has benefited from its stock market's strong performance relative to the U.S.

The fund also differs from competitors by including South Korean stocks, which are excluded from the MSCI EAFE Index. This distinction may contribute to its sector exposure, particularly in technology, where SCHF holds a 10.9% weight—higher than the 8.7% in a leading stock market ETF.

Cost efficiency adds to its appeal. While the ETF's expense ratio is 0.34%, its underlying index-based approach keeps fees low. This structure has helped it capitalise on recent trends, as the MSCI EAFE Index rose 9.3% since January 2026, far ahead of the S&P 500's 1.5% gain.

The Schwab International Equity ETF offers diversified exposure to developed stock markets beyond the U.S., with a focus on Japan, Europe, and Canada. Its inclusion of South Korea and higher tech allocation set it apart from similar stock market funds. As international stock markets continue to outperform, the ETF's broad reach and competitive fees position it as a key option for global investors.