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Is Schwab Fundamental U.S. Broad Market ETF (FNDB) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) debuted on 08/13/2013, and offers broad exposure to the Style Box - All Cap Value 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Because the fund has amassed over $844.95 million, this makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB is managed by Charles Schwab. This particular fund seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based companies based on their fundamental size and weight.
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 0.25% for this ETF, which makes it on par with most peer products in the space.
FNDB's 12-month trailing dividend yield is 1.69%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FNDB's heaviest allocation is in the Financials sector, which is about 18.90% of the portfolio. Its Information Technology and Healthcare round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.17% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
FNDB's top 10 holdings account for about 19.03% of its total assets under management.
Performance and Risk
The ETF has added about 16.60% and was up about 29.88% so far this year and in the past one year (as of 10/01/2024), respectively. FNDB has traded between $52.56 and $70.37 during this last 52-week period.
FNDB has a beta of 1 and standard deviation of 15.89% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1727 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $10.98 billion in assets, iShares Core S&P U.S. Value ETF has $19.31 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
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 U.S. Broad Market ETF (FNDB) a Strong ETF Right Now?
A smart beta exchange traded fund, the Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) debuted on 08/13/2013, and offers broad exposure to the Style Box - All Cap Value 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Because the fund has amassed over $844.95 million, this makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB is managed by Charles Schwab. This particular fund seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based companies based on their fundamental size and weight.
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 0.25% for this ETF, which makes it on par with most peer products in the space.
FNDB's 12-month trailing dividend yield is 1.69%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FNDB's heaviest allocation is in the Financials sector, which is about 18.90% of the portfolio. Its Information Technology and Healthcare round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.17% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
FNDB's top 10 holdings account for about 19.03% of its total assets under management.
Performance and Risk
The ETF has added about 16.60% and was up about 29.88% so far this year and in the past one year (as of 10/01/2024), respectively. FNDB has traded between $52.56 and $70.37 during this last 52-week period.
FNDB has a beta of 1 and standard deviation of 15.89% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1727 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $10.98 billion in assets, iShares Core S&P U.S. Value ETF has $19.31 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
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.