Could This International ETF Be One of the Best Investments of 2026?

Core Viewpoint - U.S. stock valuations are historically high, making it challenging for investors to find attractive investment opportunities [1] Group 1: U.S. Market Valuation - The average S&P 500 stock trades at nearly 23 times earnings, indicating elevated valuations [1] - Investors are struggling to identify true "bargains" in the current market environment [1] Group 2: International Stock Opportunities - International stock indices are trading at significant discounts compared to U.S. counterparts, with the MSCI EAFE index at just over 15 times earnings [2] - Most foreign stock indices offer higher dividend yields, with the MSCI EAFE yielding 3.4% compared to 1.5% for the S&P 500 [2] Group 3: Performance of International Stocks - Non-U.S. stocks outperformed the S&P 500 by over 10 percentage points in 2025 and continue to outperform in 2026 [4] - International stocks still maintain a valuation discount relative to U.S. stocks [4] Group 4: Investment Vehicles - The Schwab International Equity ETF (SCHF) provides exposure to mid- and large-cap stocks from developed countries outside the U.S. [5] - The ETF includes approximately 1,500 stocks, with the largest holding accounting for only 1.64% of its assets, ensuring low concentration [6] Group 5: Cost and Yield of the ETF - The Schwab International Equity ETF has a low expense ratio of 0.03%, allowing investors to retain more of their gains [7] - The ETF offers a dividend yield of over 3.2%, making it appealing for income-focused investors [7] Group 6: Risks and Considerations - Investing in international stocks carries risks such as currency and geopolitical headwinds, and these funds may have less exposure to AI trends compared to U.S. large-cap stocks [8] - Despite the risks, the Schwab International Equity ETF presents an attractive value proposition in an expensive market [8]