Investing in international markets can help diversify your portfolio and reduce risks associated with focusing only on U.S. stocks. One such option for investors is SFILX, or the Schwab Fundamental International Large Company Index Fund. This mutual fund provides exposure to large international companies but follows a unique fundamental approach rather than traditional market capitalization weighting.
This article will give you a deep dive into SFILX, covering its investment strategy, performance, top holdings, fees, risks, and whether it’s a good choice for your portfolio. We’ll also compare SFILX with similar funds to help you make an informed decision.
What Is SFILX?
SFILX is a mutual fund designed to track the Russell RAFI™ Developed ex U.S. Large Company Index. Instead of following the traditional method of weighting stocks by market capitalization, this fund uses fundamental factors to select and weight stocks.
Key Fundamental Factors Used by SFILX
SFILX considers three main financial metrics to determine stock weights:
- Adjusted Sales: This measures a company’s total revenue, adjusted for accounting differences.
- Retained Operating Cash Flow: This looks at how much cash flow a company generates and retains after expenses.
- Dividends + Buybacks: Companies that return value to shareholders through dividends and stock buybacks receive higher weightings.
By using these fundamental metrics, SFILX aims to provide long-term growth potential and reduce risks associated with overvalued stocks.
SFILX Fund Details
- Fund Name: Schwab Fundamental International Large Company Index Fund
- Ticker Symbol: SFILX
- Fund Type: Mutual Fund
- Expense Ratio: 0.25%
- Category: Foreign Large Value
- Benchmark Index: Russell RAFI Developed ex U.S. Large Company Index
- Minimum Investment: $1
- Holdings: Over 700 companies
SFILX Investment Strategy
How SFILX Selects Stocks
Unlike most international index funds, which weigh stocks by size (market cap), SFILX selects and weights stocks based on their financial fundamentals. This strategy gives preference to undervalued companies with strong financial health rather than simply investing in the biggest firms.
What Type of Companies Does SFILX Invest In?
SFILX primarily invests in large-cap international companies from developed markets outside the U.S. Some of the key regions include:
- Europe (United Kingdom, Germany, France, Switzerland, etc.)
- Asia-Pacific (Japan, Australia, South Korea, etc.)
- Canada
Since SFILX avoids emerging markets, it focuses on stable, well-established companies.
SFILX Performance
Historical Returns
SFILX has provided consistent returns over the years. Below is a look at its past performance:
| Year | SFILX Return (%) | Benchmark Return (%) |
| 2023 | 14.8% | 13.9% |
| 2022 | -8.6% | -9.4% |
| 2021 | 10.2% | 9.7% |
| 2020 | 7.8% | 6.5% |
SFILX has outperformed its benchmark in most years, showing its fundamental approach provides an advantage over traditional index funds.
Growth vs. Value Investing
SFILX follows a value investing strategy, which means it focuses on undervalued companies that have strong fundamentals. This differs from growth investing, where funds focus on fast-growing companies.
Value funds like SFILX typically perform better during market downturns, as they invest in financially stable companies with solid earnings and cash flow.
Top Holdings in SFILX
SFILX holds shares in over 700 companies. Below are some of its largest holdings as of 2024:
| Company | Country | Sector |
| Toyota Motor Corp | Japan | Automotive |
| Nestlé SA | Switzerland | Consumer Goods |
| Shell PLC | UK | Energy |
| Roche Holding AG | Switzerland | Healthcare |
| Samsung Electronics | South Korea | Technology |
These companies represent different sectors, ensuring diversification. SFILX reduces risk by spreading investments across industries.
SFILX Fees and Expenses
Expense Ratio
SFILX has an expense ratio of 0.25%, which is lower than many actively managed international funds but slightly higher than traditional index funds.
Other Fees to Consider
- No Load Fees: SFILX does not charge load fees when you buy or sell shares.
- Low Minimum Investment: You can start investing with just $1, making it accessible to all investors.
Overall, SFILX is a cost-effective option for international investing.
SFILX Risks and Downsides
1. Market Risk
Since SFILX invests in international stocks, it is exposed to fluctuations in global markets. If international economies slow down, SFILX’s performance may suffer.
2. Currency Risk
SFILX holds stocks in foreign currencies like the Euro, Yen, and British Pound. If the U.S. dollar strengthens, the value of these investments may decrease.
3. Lack of U.S. Exposure
Since SFILX only invests in companies outside the U.S., it does not benefit from strong performance in the U.S. stock market. If U.S. stocks outperform international stocks, SFILX may underperform.
Despite these risks, SFILX’s focus on strong, undervalued companies helps reduce volatility compared to pure market-cap-weighted funds.
SFILX vs. Other International Funds
SFILX vs. VXUS (Vanguard Total International Stock ETF)
| Feature | SFILX | VXUS |
| Expense Ratio | 0.25% | 0.07% |
| Investment Strategy | Fundamental Indexing | Market Cap Indexing |
| Stock Selection | Based on financial strength | Based on size |
| Market Focus | Developed markets | Developed + Emerging markets |
Key Takeaway: SFILX is better for value-focused investors, while VXUS offers broader exposure, including emerging markets.
SFILX vs. SCHF (Schwab International Equity ETF)
| Feature | SFILX | SCHF |
| Expense Ratio | 0.25% | 0.06% |
| Investment Strategy | Fundamental | Market Cap |
| Holdings | 700+ stocks | 1,500+ stocks |
Key Takeaway: SCHF has lower fees and broader diversification, while SFILX’s fundamental approach may provide better returns over time.
Is SFILX a Good Investment?
SFILX is an excellent option for investors looking for international diversification with a value investing strategy. It offers:
✔ Exposure to large, stable international companies
✔ A smart, fundamental-based approach to stock selection
✔ Competitive historical performance
✔ Lower fees than actively managed funds
However, it may not be ideal for those looking for emerging market exposure or a pure growth strategy.
Who Should Invest in SFILX?
- Long-term investors who want exposure to international markets
- Value investors looking for undervalued, financially strong companies
- Those who want diversification beyond U.S. stocks
Conclusion
SFILX is a strong international fund that stands out due to its fundamental indexing strategy. It has consistently outperformed many traditional index funds by focusing on financially solid companies instead of just the biggest ones.
With a low expense ratio, diversified holdings, and strong long-term potential, SFILX is a great choice for investors seeking international exposure with a value focus. However, it’s essential to consider the risks and ensure it aligns with your investment goals.
If you’re looking for an international fund that goes beyond traditional market-cap-weighted strategies, SFILX could be a great addition to your portfolio.
FAQs
Q: What is SFILX?
A: SFILX (Schwab Fundamental International Large Company Index Fund) is a mutual fund that invests in large international companies using a fundamental indexing approach.
Q: How does SFILX choose stocks?
A: SFILX selects and weights stocks based on financial factors like adjusted sales, retained cash flow, and dividends + buybacks, rather than market capitalization.
Q: What is the expense ratio of SFILX?
A: The expense ratio of SFILX is 0.25%, which is lower than many actively managed funds but slightly higher than traditional index funds.
Q: What type of companies does SFILX invest in?
A: SFILX invests in large-cap companies from developed markets outside the U.S., including Europe, Japan, Canada, and Australia.
Q: Is SFILX a good investment for long-term investors?
A: Yes, SFILX is a good choice for long-term investors who want international diversification and a value-focused investment strategy.
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