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

SWISX vs VTIAX: Your Ultimate Comparison Guide

Choosing between SWISX and VTIAX for international stock exposure is a critical decision for index investors. Both are low-cost, diversified funds from reputable providers—Schwab and Vanguard—but they target different segments of the global market. SWISX (Schwab International Index Fund) focuses exclusively on developed markets, while VTIAX (Vanguard Total International Stock Index Fund Admiral Shares) includes both developed and emerging economies. This 900-word deep dive compares performance, costs, holdings, and suitability to help you pick the right fund for your goals.

What is SWISX? Schwab’s Developed Markets Fund

SWISX is Schwab’s flagship international index fund, tracking the MSCI EAFE Index (Europe, Australasia, Far East). It invests in large and mid-cap stocks across 21 developed countries, excluding the U.S. and Canada. With over $30 billion in assets, it offers:

• Exposure to economic powerhouses like Japan, UK, and France
• Ultra-low 0.06% expense ratio
• No minimum investment requirement in Schwab accounts
• Dividend reinvestment with no fees

What is VTIAX? Vanguard’s Global Ex-US Fund

VTIAX provides comprehensive international exposure by tracking the FTSE Global All Cap ex US Index. It covers over 7,800 stocks across developed and emerging markets (like China, Brazil, and India), representing 99% of the non-U.S. equity market. Key features include:

• Broad diversification across large, mid, and small-cap companies
• 0.11% expense ratio (Admiral Shares)
• $3,000 minimum investment
• Automatic reinvestment of dividends

SWISX vs VTIAX: 5 Critical Differences

1. Market Coverage: SWISX covers only developed markets (100%), while VTIAX includes ~75% developed and ~25% emerging markets.
2. Geographic Allocation: SWISX heavily weights Japan (22%) and UK (15%). VTIAX adds significant emerging market exposure (e.g., Taiwan 7%, China 6%).
3. Holdings Diversity: SWISX holds ~1,400 stocks; VTIAX holds ~7,800+ for deeper diversification.
4. Performance Drivers: SWISX performance ties closely to Europe/Japan economies. VTIAX captures growth from emerging markets but with higher volatility.
5. Accessibility: SWISX has $0 minimum vs VTIAX’s $3,000 barrier, making SWISX more accessible for new investors.

Expense Ratios & Costs Compared

Both funds are cost-efficient but differ slightly:

• SWISX: 0.06% expense ratio – among the lowest globally
• VTIAX: 0.11% expense ratio – still below industry average

For a $10,000 investment, SWISX costs $6/year vs VTIAX’s $11. While SWISX wins on fees, VTIAX’s broader diversification may justify the extra cost for some investors.

Historical Performance: What the Data Shows

Over the past decade, emerging markets (included in VTIAX) have delivered higher returns but with sharper swings. Example (2014-2023):

• VTIAX average annual return: 4.2%
• SWISX average annual return: 3.6%

Note: Past performance doesn’t guarantee future results. Emerging markets boosted VTIAX during growth cycles but dragged during downturns like 2018 and 2022.

Which Fund Should You Choose?

Pick SWISX if you:

• Want pure developed-market exposure
• Prioritize rock-bottom costs
• Have a smaller portfolio (<$3,000)
• Prefer lower volatility

Choose VTIAX if you:

• Seek full global diversification (including emerging markets)
• Can meet the $3,000 minimum
• Accept higher risk for growth potential
• Already use Vanguard’s ecosystem

FAQs: SWISX vs VTIAX

Q: Does SWISX include emerging markets?
A: No. SWISX only covers developed markets in Europe, Asia, and Australasia.

Q: Can I hold both SWISX and VTIAX together?
A: Not recommended. They overlap significantly in developed markets, causing unnecessary duplication. Choose one based on your emerging market preference.

Q: Which fund has better dividend yields?
A: Historically, SWISX yields ~3.2% vs VTIAX’s ~3.0% due to its focus on dividend-friendly developed markets.

Q: Are these funds tax-efficient?
A: Both generate qualified dividends but may incur foreign tax withholding. Hold them in tax-advantaged accounts (e.g., IRA) for best efficiency.

Q: How do I buy SWISX or VTIAX?
A: SWISX requires a Schwab brokerage account. VTIAX requires a Vanguard account with $3,000 minimum. ETFs equivalents (SCHF for SWISX, VXUS for VTIAX) offer flexibility for smaller investments.

Final Verdict

SWISX excels for low-cost, stable exposure to developed markets, while VTIAX offers unparalleled global diversification at a marginally higher cost. For most long-term investors, VTIAX’s inclusion of emerging markets provides superior growth potential despite short-term volatility. However, SWISX remains ideal for fee-sensitive investors or those intentionally avoiding emerging markets. Align your choice with your risk tolerance, account size, and view on global economic trends.