Investors may be surprised to learn that international stocks, particularly small-cap equities, can be less volatile than their domestic counterparts. Over the past three years, the MSCI EAFE index exhibited slightly lower volatility than the S&P 500, with a maximum drawdown of 14.1% compared to 18.8% for the S&P. This trend is also reflected in the Schwab International Small-Cap Equity ETF (SCHC), which has demonstrated significantly less yearly volatility than the Russell 2000 and S&P SmallCap600 indexes.
With $5.57 billion in assets under management, SCHC offers exposure to 2,262 international small-cap stocks, providing diversification and appealing risk-adjusted returns. Notably, these international small caps often present better profitability levels compared to U.S. small caps, making them an attractive option for investors seeking quality. Additionally, the ETF’s low expense ratio of 0.08% enhances its appeal for long-term buy-and-hold strategies.
For market professionals, SCHC represents a compelling opportunity to diversify portfolios while tapping into sectors like industrials and financial services, which are poised for growth in developed markets outside the U.S.
Source: fool.com