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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
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Making its debut on 08/13/2013, smart beta exchange traded fund Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) provides investors broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $2.56 billion, this makes it one of the larger ETFs in the Broad Developed World ETFs. FNDC is managed by Charles Schwab. Before fees and expenses, FNDC seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Kawasaki Kisen Kaisha Ltd Common Stock accounts for about 0.43% of the fund's total assets, followed by Doosan Heavy Industries Common Stock Krw5000.0 (A034020) and Leoni Ag Common Stock (LEO - Free Report) .
The top 10 holdings account for about 0.96% of total assets under management.
Performance and Risk
So far this year, FNDC has lost about -9.53%, and is down about -7.06% in the last one year (as of 03/14/2022). During this past 52-week period, the fund has traded between $33.24 and $40.84.
The ETF has a beta of 0.94 and standard deviation of 20.85% for the trailing three-year period, making it a low risk choice in the space. With about 1665 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $48.21 billion in assets, Vanguard FTSE Developed Markets ETF has $99.07 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
Making its debut on 08/13/2013, smart beta exchange traded fund Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) provides investors broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $2.56 billion, this makes it one of the larger ETFs in the Broad Developed World ETFs. FNDC is managed by Charles Schwab. Before fees and expenses, FNDC seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Kawasaki Kisen Kaisha Ltd Common Stock accounts for about 0.43% of the fund's total assets, followed by Doosan Heavy Industries Common Stock Krw5000.0 (A034020) and Leoni Ag Common Stock (LEO - Free Report) .
The top 10 holdings account for about 0.96% of total assets under management.
Performance and Risk
So far this year, FNDC has lost about -9.53%, and is down about -7.06% in the last one year (as of 03/14/2022). During this past 52-week period, the fund has traded between $33.24 and $40.84.
The ETF has a beta of 0.94 and standard deviation of 20.85% for the trailing three-year period, making it a low risk choice in the space. With about 1665 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $48.21 billion in assets, Vanguard FTSE Developed Markets ETF has $99.07 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.