Is Now a Good Time to Revisit International ETFs Like SCHF?

Key Points

Many investors have likely considered reducing their exposure to U.S. stocks over the past year. That “ABUSA” (Anywhere But USA) trade is supported by four core arguments.

First, the S&P 500 is still hovering near its record highs, looks historically expensive at 30 times earnings, and trades at a premium to most other global markets. Second, the S&P 500’s gains were driven by a handful of mega-cap tech stocks — including Nvidia, Microsoft, and Apple — instead of a balanced mix of sectors. If those Magnificent Seven leaders sputter out, the entire market could crash.

Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »

Image source: Getty Images.

Third, declining interest rates will weaken the U.S. dollar and make overseas companies — which report their earnings in stronger overseas currencies — more appealing investments. Lastly, the Trump Administration’s unpredictable trade policy changes, fluctuating tariffs, and pressure on Fed independence could drive even more investors away from U.S. stocks.

However, it can be challenging for some investors to pivot away from the U.S. market into unfamiliar overseas markets. So if you want to increase your overseas exposure but don’t know where to start, it might be smart to invest in a well-diversified exchange-traded fund (ETF), which gives you instant diversification to a basket of top international stocks. Let’s review one of those top funds — the Schwab International Equity ETF (NYSEMKT: SCHF) — and see why it might be a good hedge against the U.S. market’s near-term volatility.

What does the Schwab International Equity ETF own?

The Schwab International Equity ETF tracks the FTSE Developed ex-U.S. Index, which comprises mid- and large-cap stocks from developed markets outside the United States. Its five largest markets are Japan (20.6% of its portfolio), the U.K. (12.2%), Canada (10.9%), France (8.3%), and Switzerland (7.9%). It has zero exposure to mainland China.

By sector, the ETF allocates 25.4% to financial stocks, 18.3% to industrial stocks, 10.9% to information technology stocks, 9.3% to healthcare stocks, and 9.2% to consumer discretionary stocks. It splits the rest between the materials, consumer staples, energy, communication services, utilities, and real estate sectors.

It currently holds 1,498 stocks, including ASML (NASDAQ: ASML), Samsung, SK Hynix, Roche (OTC: RHHBY), and HSBC (NYSE: HSBC). Some of those top stocks — such as Samsung and SK Hynix — can’t be accessed by U.S. investors through regular exchanges.

The FTSE Developed ex-U.S. Index is a market-cap-weighted index rebalanced quarterly. Therefore, the stronger stocks will naturally stay in the index, while the weaker ones will drop out.

Schwab’s ETF is passively managed and replicates the index’s components to closely match its performance. Both the ETF and its underlying index have risen more than 40% over the past five years. Since it isn’t actively managed, it only charges a low expense ratio of 0.03%.

As of this writing, SCHF has a net asset value (NAV) of $26.40 per share. That’s just slightly below its current trading price of $26.60 per share, so it isn’t overvalued relative to its underlying assets. It’s also paid a trailing distribution yield of 3.4% over the past 12 months, which makes it an attractive ETF for income investors as interest rates decline.

Is it the right time to buy this international ETF?

I don’t think it’s a great idea to sell all your U.S. stocks, since the U.S. market has a proven track record of outperforming other markets over the long term. That said, investors who ignore international stocks could miss out on significant gains if the U.S. market stalls. Therefore, I believe it’s still a great time to invest in SCHF — even if you don’t think the entire “ABUSA” thesis — as a hedge against the U.S. market’s near-term volatility.

Should you buy stock in Schwab International Equity ETF right now?

Before you buy stock in Schwab International Equity ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab International Equity ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $443,353!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,155,789!*

Now, it’s worth noting Stock Advisor’s total average return is 920% — a market-crushing outperformance compared to 196% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks »

*Stock Advisor returns as of February 11, 2026.

HSBC Holdings is an advertising partner of Motley Fool Money. Leo Sun has positions in ASML. The Motley Fool has positions in and recommends ASML, Microsoft, and Nvidia. The Motley Fool recommends HSBC Holdings and Roche Holding AG. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.