SCHF tracks the FTSE Developed ex US Index, covering large and mid-cap companies in developed markets outside the United States. Europe (including the UK, France, Germany, Switzerland and the Netherlands) and Japan account for the majority of the portfolio, with Australia and other markets making up the rest. Currency exposure is not hedged, so changes in the euro, yen and pound relative to the US dollar affect returns for US-based investors. International developed markets have traded at lower valuations than US stocks for an extended period, and their returns are not perfectly correlated with US returns, which is why investors use them to diversify away from the US. Unlike VEA, SCHF does not hold small-cap stocks.
