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Is Schwab Fundamental U.S. Broad Market ETF (FNDB) a Strong ETF Right Now?
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The Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDB has been able to amass assets over $911.43 million, making it one of the largest ETFs in the Style Box - All Cap Value. FNDB 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.25% for FNDB, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.60%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 20.10% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.95% of 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 17.6% of its total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market ETF has gained about 22.70% so far, and is up roughly 30.73% over the last 12 months (as of 12/02/2024). FNDB has traded between $19.25 and $24.70 in this past 52-week period.
FNDB has a beta of 1 and standard deviation of 15.87% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1724 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 $12.19 billion in assets, iShares Core S&P U.S. Value ETF has $20.47 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?
The Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDB has been able to amass assets over $911.43 million, making it one of the largest ETFs in the Style Box - All Cap Value. FNDB 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.25% for FNDB, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.60%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 20.10% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.95% of 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 17.6% of its total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market ETF has gained about 22.70% so far, and is up roughly 30.73% over the last 12 months (as of 12/02/2024). FNDB has traded between $19.25 and $24.70 in this past 52-week period.
FNDB has a beta of 1 and standard deviation of 15.87% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1724 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 $12.19 billion in assets, iShares Core S&P U.S. Value ETF has $20.47 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.