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Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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. FNDB has been able to amass assets over $341.58 million, making it one of the larger ETFs in the Style Box - All Cap Value. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.
The fund has a 12-month trailing dividend yield of 1.78%.
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.
Representing 16.90% of the portfolio, the fund has heaviest allocation to the Financials sector; Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 3.76% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Jpmorgan Chase + Co Common Stock Usd1.0 (JPM - Free Report) .
Performance and Risk
The ETF return is roughly 18.17% and it's up approximately 61.43% so far this year and in the past one year (as of 04/14/2021), respectively. FNDB has traded between $32.12 and $52.38 during this last 52-week period.
The ETF has a beta of 1.11 and standard deviation of 23.38% for the trailing three-year period, making it a medium risk choice in the space. With about 1661 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 $909.10 million in assets, iShares Core S&P U.S. Value ETF has $9.31 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?
Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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. FNDB has been able to amass assets over $341.58 million, making it one of the larger ETFs in the Style Box - All Cap Value. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.
The fund has a 12-month trailing dividend yield of 1.78%.
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.
Representing 16.90% of the portfolio, the fund has heaviest allocation to the Financials sector; Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 3.76% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Jpmorgan Chase + Co Common Stock Usd1.0 (JPM - Free Report) .
Performance and Risk
The ETF return is roughly 18.17% and it's up approximately 61.43% so far this year and in the past one year (as of 04/14/2021), respectively. FNDB has traded between $32.12 and $52.38 during this last 52-week period.
The ETF has a beta of 1.11 and standard deviation of 23.38% for the trailing three-year period, making it a medium risk choice in the space. With about 1661 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 $909.10 million in assets, iShares Core S&P U.S. Value ETF has $9.31 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.