Is the Schwab International Equity ETF or Vanguard Total World Stock ETF Better for Long-Term Diversification?
Schwab's lower costs and higher dividend yield appeal to income investors, while Vanguard's broader global reach suits those seeking complete market exposure.
The choice between the Vanguard Total World Stock ETF and the Schwab International Equity ETF hinges on an investor's diversification goals. The Vanguard Total World Stock ETF provides a broader international scope, covering both U.S. and international markets. This is achieved by tracking the FTSE Global All Cap Index, which encompasses the entire investable world.
On the other hand, the Schwab International Equity ETF focuses solely on developed economies outside the United States, utilizing the FTSE Developed ex US Index. This targeted approach allows investors to concentrate on international developed markets at a lower cost.
Beta, a measure of price volatility relative to the S&P 500, is derived from monthly returns over the fund's available history (up to five years). The 12-month total return reflects the performance of the fund over the trailing year. Dividend yield, calculated from the trailing 12-month distribution yield, adds another layer of comparison between the two funds.
In essence, the Vanguard Total World Stock ETF offers a more comprehensive international exposure, while the Schwab International Equity ETF provides a cost-effective and specialized focus on international developed markets. The decision between the two would depend on an investor's specific diversification objectives and their comfort with the level of international diversification desired.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
