EFA vs. SCHF: What’s The Difference?

The iShares MSCI EAFE ETF (EFA) and the Schwab International Equity ETF (SCHF) are both among the Top 100 ETFs. EFA is a iShares Foreign Large Blend fund and SCHF is a Schwab ETFs Foreign Large Blend fund. So, what’s the difference between EFA and SCHF? And which fund is better?

The expense ratio of EFA is 0.26 percentage points higher than SCHF’s (0.32% vs. 0.06%). EFA also has a lower exposure to the financial services sector and a lower standard deviation. Overall, EFA has provided higher returns than SCHF over the past ten years.

In this article, we’ll compare EFA vs. SCHF. We’ll look at risk metrics and holdings, as well as at their industry exposure and fund composition. Moreover, I’ll also discuss EFA’s and SCHF’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.

Summary

EFA SCHF
Name iShares MSCI EAFE ETF Schwab International Equity ETF
Category Foreign Large Blend Foreign Large Blend
Issuer iShares Schwab ETFs
AUM 56.77B 26.99B
Avg. Return 6.47% 6.43%
Div. Yield 2.28% 2.16%
Expense Ratio 0.32% 0.06%

The iShares MSCI EAFE ETF (EFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 56.77B total assets under management and has yielded an average annual return of 6.47% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.32%.

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% with an expense ratio of 0.06%.

EFA’s dividend yield is 0.12% higher than that of SCHF (2.28% vs. 2.16%). Also, EFA yielded on average 0.04% more per year over the past decade (6.47% vs. 6.43%). The expense ratio of EFA is 0.26 percentage points higher than SCHF’s (0.32% vs. 0.06%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

EFA vs. SCHF - Industry Exposure

EFA SCHF
Technology 9.68% 11.55%
Industrials 15.01% 14.86%
Energy 3.51% 4.23%
Communication Services 5.68% 5.65%
Utilities 3.35% 3.09%
Healthcare 12.8% 11.05%
Consumer Defensive 10.56% 9.41%
Real Estate 3.01% 3.17%
Financial Services 16.88% 17.85%
Consumer Cyclical 11.62% 10.87%
Basic Materials 7.91% 8.26%

The iShares MSCI EAFE ETF (EFA) has the most exposure to the Financial Services sector at 16.88%. This is followed by Industrials and Healthcare at 15.01% and 12.8% respectively. Utilities (3.35%), Energy (3.51%), and Communication Services (5.68%) only make up 12.54% of the fund’s total assets.

EFA’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.91%, 9.68%, 10.56%, 11.62%, and 12.8%.

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

EFA is 0.97% less exposed to the Financial Services sector than SCHF (16.88% vs 17.85%). EFA’s exposure to Industrials and Healthcare stocks is 0.15% higher and 1.75% higher respectively (15.01% vs. 14.86% and 12.8% vs. 11.05%). In total, Utilities, Energy, and Communication Services also make up 0.43% less of the fund’s holdings compared to SCHF (12.54% vs. 12.97%).

Holdings

EFA - Holdings

EFA Holdings Weight
Nestle SA 2.11%
ASML Holding NV 1.69%
Roche Holding AG 1.55%
LVMH Moet Hennessy Louis Vuitton SE 1.28%
Novartis AG 1.19%
Toyota Motor Corp 1.09%
AstraZeneca PLC 0.92%
Unilever PLC 0.9%
AIA Group Ltd 0.88%
SAP SE 0.86%

EFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.11%, 1.69%, 1.55%, 1.28%, and 1.19%.

Toyota Motor Corp (1.09%), AstraZeneca PLC (0.92%), and Unilever PLC (0.9%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the EFA’s holdings at 0.88% and 0.86%.

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

EFA SCHF
Mean Return 0.57 0.58
R-squared 96.78 98.16
Std. Deviation 15.01 15.08
Alpha 0.47 0.53
Beta 0.98 0.99
Sharpe Ratio 0.41 0.42
Treynor Ratio 5.33 5.39

The iShares MSCI EAFE ETF (EFA) has a Mean Return of 0.57 with a R-squared of 96.78 and a Standard Deviation of 15.01. Its Beta is 0.98 while EFA’s Alpha is 0.47. Furthermore, the fund has a Sharpe Ratio of 0.41 and a Treynor Ratio of 5.33.

The Schwab International Equity ETF (SCHF) has a Alpha of 0.53 with a Treynor Ratio of 5.39 and a Mean Return of 0.58. Its Standard Deviation is 15.08 while SCHF’s R-squared is 98.16. Furthermore, the fund has a Sharpe Ratio of 0.42 and a Beta of 0.99.

EFA’s Mean Return is 0.01 points lower than that of SCHF and its R-squared is 1.38 points lower. With a Standard Deviation of 15.01, EFA is slightly less volatile than SCHF. The Alpha and Beta of EFA are 0.06 points lower and 0.01 points lower than SCHF’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

EFA vs. SCHF - Annual Returns

Year EFA SCHF
2020 7.92% 9.86%
2019 21.94% 22.15%
2018 -13.83% -14.39%
2017 24.94% 25.83%
2016 0.96% 2.88%
2015 -0.9% -2.44%
2014 -5.04% -4.44%
2013 22.62% 20.03%
2012 17.22% 17.12%
2011 -12.18% -12.32%
2010 7.52% 8.6%

EFA had its best year in 2017 with an annual return of 24.94%. EFA’s worst year over the past decade yielded -13.83% and occurred in 2018. In most years the iShares MSCI EAFE ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 0.96%, 7.52%, and 7.92% respectively.

The year 2017 was the strongest year for SCHF, returning 25.83% on an annual basis. The poorest year for SCHF in the last ten years was 2018, with a yield of -14.39%. Most years the Schwab International Equity ETF has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 2.88%, 8.6%, and 9.86% respectively.

Portfolio Growth

EFA vs. SCHF - Portfolio Growth

Fund Initial Balance Final Balance CAGR
EFA $10,000 $16,991 6.47%
SCHF $10,000 $17,089 6.43%

A $10,000 investment in EFA would have resulted in a final balance of $16,991. This is a profit of $6,991 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.47%.

With a $10,000 investment in SCHF, the end total would have been $17,089. This equates to a $7,089 profit over 10 years and a compound annual growth rate (CAGR) of 6.43%.

EFA’s CAGR is 0.04 percentage points higher than that of SCHF and as a result, would have yielded $98 less on a $10,000 investment. Thus, EFA outperformed SCHF by 0.04% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply