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Is Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
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The Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $4.95 billion, this makes it one of the largest ETFs in the Broad Emerging Market ETFs. FNDE is managed by Charles Schwab. FNDE seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net) before fees and expenses.
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets 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.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
FNDE's 12-month trailing dividend yield is 5%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 3.91% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 20.05% of FNDE's total assets under management.
Performance and Risk
The ETF has added roughly 8.90% and was up about 8.94% so far this year and in the past one year (as of 12/12/2023), respectively. FNDE has traded between $24.45 and $28.35 during this last 52-week period.
The ETF has a beta of 0.76 and standard deviation of 16.67% for the trailing three-year period, making it a medium risk choice in the space. With about 392 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $71.43 billion in assets, Vanguard FTSE Emerging Markets ETF has $72.26 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market 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 Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
The Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $4.95 billion, this makes it one of the largest ETFs in the Broad Emerging Market ETFs. FNDE is managed by Charles Schwab. FNDE seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net) before fees and expenses.
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets 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.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
FNDE's 12-month trailing dividend yield is 5%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 3.91% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 20.05% of FNDE's total assets under management.
Performance and Risk
The ETF has added roughly 8.90% and was up about 8.94% so far this year and in the past one year (as of 12/12/2023), respectively. FNDE has traded between $24.45 and $28.35 during this last 52-week period.
The ETF has a beta of 0.76 and standard deviation of 16.67% for the trailing three-year period, making it a medium risk choice in the space. With about 392 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $71.43 billion in assets, Vanguard FTSE Emerging Markets ETF has $72.26 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market 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.