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ETF Specialist

Cheap, Diversified Exposure to Foreign Developed Markets

Developed-market indexes are less concentrated than they were 30 years ago.

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Foreign developed-market indexes are less concentrated than they have been in decades. Japanese firms have dominated many of these benchmarks over the past 30-plus years. But an extended bout of relatively poor performance from these companies has cut their standing to less than 25% of the FTSE Developed Ex US Index—down from roughly 60% in the early 1990s. So, low-fee developed-market index-trackers are less dependent on a single market and currency, making funds like  Schwab International Equity ETF (SCHF) a solid way to get exposure to stocks from established markets.

SCHF has a well-diversified, cap-weighted portfolio that captures the market’s collective wisdom, and is complemented by one of the lowest expense ratios in the foreign large-blend Morningstar Category. This should give it a reliable advantage over its more expensive competitors, and supports a Morningstar Analyst Rating of Silver.

Daniel Sotiroff has a position in the following securities mentioned above: VEA. Find out about Morningstar’s editorial policies.