SWISX vs VTIAX: Which International Index Fund Wins for Your Portfolio?

SWISX vs VTIAX: The International Index Fund Showdown

Investors seeking global diversification beyond U.S. markets often compare Schwab International Index Fund (SWISX) and Vanguard Total International Stock Index Fund Admiral Shares (VTIAX). Both track international equities but take different approaches to capturing global growth. This comprehensive analysis breaks down their structures, performance, costs, and suitability to help you determine which fund aligns with your investment strategy.

Key Differences Between SWISX and VTIAX

• Market Coverage: SWISX targets developed markets only (Europe, Pacific), while VTIAX includes emerging markets like China and Brazil
• Holdings Scale: VTIAX holds over 7,900 stocks vs. SWISX’s ~1,400
• Expense Ratio: SWISX (0.06%) edges VTIAX (0.11%) for cost efficiency
• Minimum Investment: SWISX: $0 vs. VTIAX: $3,000 initial requirement
• Emerging Markets Exposure: VTIAX allocates ~25% to EM; SWISX has 0%

Performance Comparison: Historical Returns

Over the past decade, VTIAX’s inclusion of emerging markets has created performance divergence. During growth cycles in developing economies (e.g., 2016-2017), VTIAX outperformed by 3-5%. However, SWISX demonstrated greater resilience during EM downturns like 2018 and 2022. Neither consistently beats the other long-term – performance hinges on regional market cycles. Both trail U.S. indices over 10 years but offer crucial diversification benefits.

Expense Ratios and Hidden Costs

SWISX maintains a razor-thin 0.06% expense ratio versus VTIAX’s 0.11% – a 45% difference that compounds significantly over time. On a $100,000 investment:

• SWISX annual fee: $60
• VTIAX annual fee: $110

No transaction fees apply at their respective brokerages (Schwab and Vanguard). Both funds feature negligible turnover rates under 5%, minimizing hidden tax costs.

Holdings and Diversification Analysis

SWISX Portfolio Breakdown

• Japan: 22%
• UK: 15%
• France: 12%
• 0% emerging markets exposure
• Top sectors: Financials (22%), Industrials (14%)

VTIAX Portfolio Breakdown

• Japan: 17%
• China: 8%
• UK: 8%
• India: 4%
• Emerging markets: 24%
• Top sectors: Financials (19%), Technology (12%)

Which Fund Fits Your Investment Strategy?

Choose SWISX if:

• You want pure developed markets exposure
• Minimizing costs is your top priority
• You’re building a modular portfolio with separate EM allocation
• Starting with smaller investments ($0 minimum)

Choose VTIAX if:

• You prefer all-in-one global diversification
• You believe in long-term EM growth potential
• You meet the $3,000 minimum
• Tax-advantaged accounts are your primary focus

FAQs: SWISX vs VTIAX

Q: Can I hold both funds together?
A: Yes, but significant overlap exists in developed markets. Pairing SWISX with an EM fund (like SCHE) may create more targeted exposure.

Q: Which has better dividend yields?
A: Historically comparable – both yield around 3%. SWISX focuses on mature dividend-paying companies, while VTIAX’s EM holdings offer growth potential but lower yields.

Q: Are these funds tax-efficient?
A: Moderately. International tax credits offset some liabilities, but hold in tax-advantaged accounts when possible. VTIAX’s emerging markets exposure may generate higher non-qualified dividends.

Q: How do currency fluctuations affect them?
A: Both carry currency risk. VTIAX’s EM exposure amplifies volatility during dollar strength, while SWISX is more sensitive to Euro/Yen movements.

Final Verdict: SWISX delivers ultra-low-cost developed markets access ideal for cost-conscious investors, while VTIAX offers comprehensive global diversification at a reasonable price. Your choice depends on whether you prioritize expense minimization (SWISX) or broader market coverage (VTIAX). Both remain excellent core holdings for international allocation.