URTH and SCHE offer different paths to international equity exposure, with notable differences in expense ratios, dividend yields, and risk profiles-see how these ETFs stack up for U.S. investors seeking global diversification
For U.S. investors looking to diversify beyond domestic stocks, international equity ETFs can play a key role in portfolio construction. Two widely used options-iShares MSCI World ETF (URTH) and Schwab Emerging Markets Equity ETF (SCHE)-offer distinct approaches to global investing. While both provide broad exposure outside the U.S., their underlying holdings, cost structures, and risk profiles differ in ways that can significantly affect long-term outcomes.
URTH tracks developed markets, holding more than 1,300 stocks from countries such as Japan, the United Kingdom, and Germany, with a heavy allocation to large-cap technology companies. SCHE, by contrast, focuses on emerging markets, investing in over 2,200 companies across regions like Asia, Latin America, and Eastern Europe. This fundamental difference shapes not only the funds' performance but also their volatility and income characteristics.
Cost, Yield, and Size Differences
Expense ratios and dividend yields are two of the most immediate factors investors notice when comparing these funds. As of July 19, 2026, SCHE charges an expense ratio of 0.06%, making it one of the lowest-cost emerging markets ETFs available. URTH's expense ratio stands at 0.24%, which is higher than many broad-market ETFs but typical for global developed market exposure. For investors with substantial balances, these differences can translate into meaningful cost savings over time.
Dividend yields also diverge. SCHE's trailing 12-month yield is 2.66%, compared to URTH's 1.40%. This reflects both the higher payout rates common in some emerging markets and the sector composition of each fund. URTH's focus on technology and growth-oriented companies tends to result in lower current income, while SCHE's exposure to financials and consumer cyclical sectors in developing economies supports a higher yield.
In terms of assets under management, SCHE holds $12.5 billion, while URTH manages $8.1 billion. Both are large enough to offer ample liquidity for most retail investors, but SCHE's larger asset base may contribute to tighter bid-ask spreads and greater trading efficiency.
Performance and Volatility
Recent performance data highlights the trade-offs between developed and emerging market exposure. Over the 12 months ending July 19, 2026, URTH delivered a total return of 19.95%, slightly outpacing SCHE's 18.34%. Over a five-year period, $1,000 invested in URTH would have grown to $1,724, while the same amount in SCHE would have reached $1,279. These figures reflect both the strong run in developed market technology stocks and the relative underperformance of some emerging economies during the period.
Risk metrics also differ. URTH's five-year maximum drawdown-the largest peak-to-trough decline-was 26.04%, compared to SCHE's 35.73%. Beta, a measure of volatility relative to the S&P 500, is 0.96 for URTH and 0.87 for SCHE. While SCHE's lower beta suggests less correlation with U.S. large-cap stocks, its higher drawdown points to greater vulnerability during periods of global market stress, a common feature of emerging market investments.
According to data from The Motley Fool, both funds have delivered positive returns over the past year, but URTH's focus on developed markets and technology leaders has provided a smoother ride for investors willing to accept a higher expense ratio and lower yield.
Portfolio Composition and Sector Exposure
URTH's portfolio is dominated by large-cap technology names, with Nvidia, Apple, and Microsoft among its top holdings. Technology accounts for 31% of assets, followed by financial services and industrials. The fund's developed market focus means it is less exposed to the political and currency risks that can affect emerging economies, but it is more sensitive to trends in global tech and consumer demand.
SCHE, on the other hand, is heavily weighted toward companies like Taiwan Semiconductor Manufacturing, Tencent, and Alibaba Group. Technology makes up 34% of its assets, but the fund also has significant allocations to financial services and consumer cyclical sectors. With 2,221 holdings, SCHE offers broad diversification across emerging markets, but investors should be aware that these regions can experience sharp swings due to geopolitical events, regulatory changes, and currency fluctuations.
Both funds pay regular dividends, with URTH distributing $2.84 per share and SCHE $0.95 per share over the trailing 12 months. The difference in per-share payout reflects not only yield but also the funds' share prices and underlying income generation.
Choosing the Right International ETF
Deciding between URTH and SCHE depends on an investor's goals, risk tolerance, and time horizon. URTH may appeal to those seeking exposure to established global companies with a track record of steady growth, albeit at a higher cost and with lower income. SCHE offers access to faster-growing but more volatile markets, along with a higher yield and lower expense ratio.
It's important to recognize that past performance does not guarantee future results, and the relative appeal of developed versus emerging markets can shift as global economic conditions evolve. Investors should also consider how each fund fits within their broader asset allocation, including U.S. equities, bonds, and other holdings.
Expense ratios, dividend yields, and sector exposures are just a few of the factors that distinguish international ETFs. For many investors, combining developed and emerging market funds can provide a more balanced approach to global diversification, helping to manage risk while capturing growth opportunities across different regions and economic cycles.
