Schwab Emerging Markets Equity ETF

Schwab Emerging Markets Equity ETF (SCHE) is an index fund that tracks the FTSE Emerging Index. The index holds large and mid-sized companies in emerging market countries such as Taiwan, India, China and Brazil. The fund's main draw is cost. Its expense ratio of 0.07% ties Vanguard's VWO for lowest among similar funds, against a 0.27% peer average. However, its 1-year and 3-year returns trailed most of those peers through October 29, 2026.

• Over the year to Nov 2, 2026, SCHE returned +4.4%, 8th of 9 among similar funds.
• Its 5-year annualized return was +5.2% and its 10-year +7.2%.
• In the 2020 COVID crash it fell 30.7% and regained its old high 4.2 months after the low.
• Its worst full calendar year was 2011 (-19.1%); its best was 2017 (+32.7%).
• The deepest fall in its price history was 36.2% (Jan 26, 2018 to Mar 23, 2020), recovered by Nov 9, 2020.

As of Aug 31, 2026, the fund held 2,192 securities; the ten largest made up 29.8% of assets.

• Over the three months to Aug 31, 2026, investors added a net $62.7M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: -1.74%, +0.67%, +2.83%.

The fund aims to match the total return of the FTSE Emerging Index, before fees. The index provider, FTSE, is part of the London Stock Exchange Group. The index covers large and mid-sized companies, roughly the top 90% of each eligible emerging market by size. As of August 31, 2025, it held 2,256 stocks in 23 countries. Bigger companies carry more weight. As of August 31, 2026, Taiwan Semiconductor Manufacturing alone made up about 17% of the fund, and Taiwan as a whole about 32%.

Schwab doesn't buy every stock in the index. It uses "sampling": it holds a subset that, taken together, should perform like the full index. The fund had 2,192 holdings as of August 31, 2026. At least 90% of net assets go into index stocks or depositary receipts, which are certificates traded on other exchanges that represent shares of foreign companies. Up to 10% can go into stocks expected to join the index, other funds, or futures contracts. The futures keep spare cash invested in the market. The fund may also lend its securities to earn extra income.

Two mechanics matter to holders. First, the fund does not hedge currencies. Its value in dollars rises and falls with currencies like the Taiwan dollar and the Indian rupee. Second, it trades little. Portfolio turnover was 7%, which helps keep trading costs low.

• SCHE charges 0.07% a year, versus an average of 0.27% for the similar funds below (1st of 9, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $7 in the first year and $90 over 10 years (assuming a 5% annual return).

It adds emerging market companies that US-focused portfolios usually lack, at very low cost, but it is too volatile to anchor a portfolio.

SCHE could add companies that most US-stock portfolios lack, such as Taiwan Semiconductor Manufacturing, Tencent and Reliance Industries. It costs 0.07% a year. In the SEC's standard example, that comes to $90 over 10 years on $10,000. The trade-off is volatility. The fund fell 30.7% in the 2020 COVID crash. It fell 28% in the 2022 bear market and took 23.5 months to recover. Its deepest drop, 36.2%, ran from January 2018 to March 2020, and it didn't recover until November 2020. The fund launched in 2010, so it has no record for 2008. Its worst calendar year was 2011, when it fell 19.1%. Anyone forced to sell during such a stretch would lock in losses.

The trailing 12-month yield was 2.73% as of October 29, 2026. Dividends are paid twice a year, so the fund is not a source of steady monthly income. Past results don't predict future ones, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.