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Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?
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The Schwab Fundamental U.S. Broad Market Index 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?
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDB has been able to amass assets over $264.84 million, making it one of the larger ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.
It's 12-month trailing dividend yield comes in at 2.19%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 19.30% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 6.56% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT - Free Report) and Exxon Mobil Corp Common Stock (XOM - Free Report) .
Its top 10 holdings account for approximately 19.22% of FNDB's total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market Index ETF has added about 7.01% so far, and was up about 7.14% over the last 12 months (as of 12/22/2020). FNDB has traded between $26.60 and $44.81 in this past 52-week period.
The fund has a beta of 1.10 and standard deviation of 23.54% for the trailing three-year period, which makes FNDB a medium risk choice in this particular space. With about 1651 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market Index 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.
Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) tracks NASDAQ US Dividend Achievers 50 Index and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Invesco High Yield Equity Dividend Achievers ETF has $769.54 million in assets, iShares Core S&P U.S. Value ETF has $8.12 billion. PEY has an expense ratio of 0.52% 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 Index ETF (FNDB) a Strong ETF Right Now?
The Schwab Fundamental U.S. Broad Market Index 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?
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDB has been able to amass assets over $264.84 million, making it one of the larger ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.
It's 12-month trailing dividend yield comes in at 2.19%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 19.30% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 6.56% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT - Free Report) and Exxon Mobil Corp Common Stock (XOM - Free Report) .
Its top 10 holdings account for approximately 19.22% of FNDB's total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market Index ETF has added about 7.01% so far, and was up about 7.14% over the last 12 months (as of 12/22/2020). FNDB has traded between $26.60 and $44.81 in this past 52-week period.
The fund has a beta of 1.10 and standard deviation of 23.54% for the trailing three-year period, which makes FNDB a medium risk choice in this particular space. With about 1651 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market Index 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.
Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) tracks NASDAQ US Dividend Achievers 50 Index and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Invesco High Yield Equity Dividend Achievers ETF has $769.54 million in assets, iShares Core S&P U.S. Value ETF has $8.12 billion. PEY has an expense ratio of 0.52% 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.