FLIA vs SCHZ

FLIABFranklin International Aggregate Bond ETF

SCHZASchwab U.S. Aggregate Bond ETF

In short

FLIA Bonds from everywhere except America, with the currency swings hedged away. FLIA holds non-dollar debt against the Bloomberg Global Aggregate ex-USD Hedged benchmark, at a fee below what the typical aggregate bond ETF charges.

SCHZ Schwab's core bond holding: the broad U.S. investment-grade bond market, over 10,000 issues deep, for 0.03% a year. That is the floor of a category whose median fee is more than ten times higher. Running since 2011, pays monthly.

Stated mandate

FLIA The Fund seeks total return through an international aggregate fixed-income strategy. Its mandate includes exposure to non-U.S.-dollar-denominated securities and currency-management techniques intended to hedge foreign-currency exposure.

SCHZ The fund seeks to track the total return of an index representing the broad U.S. investment-grade bond market.

Why people hold it

• FLIA Charges 0.25% a year, under the going rate for aggregate bond ETFs. Cheap is rare in the ex-US corner of the bond market.
• The mandate pairs non-dollar bonds with currency-management techniques meant to hedge foreign-exchange exposure, so foreign rates and credit do the work instead of the dollar.
• Running since 2018 as a plain 1940 Act ETF, it has a real operating history behind it rather than a launch-week story.
• Franklin has grown it into a mid-size fund that trades with moderate regularity, which stands out among specialist international bond products.

• SCHZ 0.03% a year sits at the category floor, against a cohort median of 0.36%. Only a short list of aggregate-bond funds matches it, including AGG, BND and SPAB.
• Tracks the Bloomberg US Aggregate Bond Index tightly, one of the cleanest index implementations among the 187 funds in its peer group.schwabassetmanagement.com
• One ticker, thousands of investment-grade U.S. bonds, income paid monthly. The plumbing of a bond portfolio without buying a single bond yourself.
• Live since 2011 and now a multi-billion-dollar fund that trades actively, so trading costs on ordinary retail-sized orders tend to be minor.

Worth knowing

• FLIA Core US bond ETFs cost far less: BND, SPAB and SCHZ run 0.03% and BNDX 0.07%. The premium here buys the hedged ex-US mandate, not broader coverage.
• Hedging targets currency swings, not the bonds themselves. Foreign interest-rate moves and credit risk still flow through, and hedging carries its own cost.
• About 80 positions, a tighter lineup than broad aggregate funds that hold thousands of bonds, so individual issuers and countries carry more weight.

• SCHZ This is duration exposure, not a cash substitute. Interest-rate moves, not credit selection, drive most of the ride, and that is the weakest part of its risk profile.
• Investment grade and U.S. only: no high-yield, no foreign bonds. Funds like BNDX cover the international side of the cohort.
• The aggregate-bond aisle is commoditized. Against AGG, BND and SPAB at the same 0.03%, the differences come down to index variant and where you already custody, not fee.

Full FLIA profile⁠

Full SCHZ profile⁠