SCHE ETF

SCHE: I believe there is more potential for losses than gains in emerging markets (Rating Downgrade)

SCHE primarily invests in mid and large caps, with minimal exposure to small caps, and has a low expense ratio and high liquidity. The ETF has underperformed in recent years due to overexposure to China, while other less-exposed markets performed better. In my opinion, the outlook for emerging markets in 2024 will be neutral, with uncertainties in China and Taiwan.

Schwab Emerging Markets Equity ETF tracks the FTSE Emerging Index and has a 3% yield. Almost one third of assets is invested in Chinese companies and the heaviest sector is financials. Among close competitors, SPEM and VWO show more attractive characteristics.

The Schwab Emerging Markets Equity ETF has attractive valuations and improving fundamentals in emerging markets, but its high exposure to China and its underperformance compared to the S&P 500 makes it a risky investment. Despite a decline in 2022, SCHE has stabilized in 2023, and its valuation is more attractive, with the revised Buffett Indicator showing that the market valuation of the top countries in SCHE's portfolio as either fair or cheap. However, the ETF's high exposure to China, which faces potential long-term economic challenges, and its underperformance compared to the S&P 500 due to the higher risk of emerging markets, make it a less desirable long-term holding for investors.