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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
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The Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $3.36 billion, making it one of the larger ETFs in the Broad Developed World ETFs. FNDC, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The RAFI Fundamental High Liquidity Developed ex US Small Index measures the performance of small non-U.S. developed market companies based on their fundamental size and weight.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.39% for FNDC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.71%.
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.
Taking into account individual holdings, Dsm Firmenich Ag (DSFIR) accounts for about 0.46% of the fund's total assets, followed by Novozymes Class B (NSIS) and Hd Korea Shipbuilding & Offshore E.
Its top 10 holdings account for approximately 2.4% of FNDC's total assets under management.
Performance and Risk
So far this year, FNDC has gained about 8.69%, and was up about 18.37% in the last one year (as of 09/24/2024). During this past 52-week period, the fund has traded between $30.23 and $37.83.
The ETF has a beta of 0.93 and standard deviation of 16.62% for the trailing three-year period, making it a low risk choice in the space. With about 2010 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 $76.89 billion in assets, Vanguard FTSE Developed Markets ETF has $141 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.
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?
The Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $3.36 billion, making it one of the larger ETFs in the Broad Developed World ETFs. FNDC, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The RAFI Fundamental High Liquidity Developed ex US Small Index measures the performance of small non-U.S. developed market companies based on their fundamental size and weight.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.39% for FNDC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.71%.
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.
Taking into account individual holdings, Dsm Firmenich Ag (DSFIR) accounts for about 0.46% of the fund's total assets, followed by Novozymes Class B (NSIS) and Hd Korea Shipbuilding & Offshore E.
Its top 10 holdings account for approximately 2.4% of FNDC's total assets under management.
Performance and Risk
So far this year, FNDC has gained about 8.69%, and was up about 18.37% in the last one year (as of 09/24/2024). During this past 52-week period, the fund has traded between $30.23 and $37.83.
The ETF has a beta of 0.93 and standard deviation of 16.62% for the trailing three-year period, making it a low risk choice in the space. With about 2010 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 $76.89 billion in assets, Vanguard FTSE Developed Markets ETF has $141 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.
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.