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Is Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed Market ETFs 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 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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Charles Schwab. It has amassed assets over $5.04 billion, making it one of the largest ETFs in the Broad Developed Market ETFs. Before fees and expenses, FNDE seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net).
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets Index.
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.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.13%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.08% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 4.08% of FNDE's total assets under management.
Performance and Risk
So far this year, FNDE has gained about 10.56%, and is up about 9.86% in the last one year (as of 08/10/2023). During this past 52-week period, the fund has traded between $23.19 and $28.35.
The ETF has a beta of 0.76 and standard deviation of 17.11% for the trailing three-year period, making it a medium risk choice in the space. With about 399 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is not a suitable option for investors seeking to outperform the Broad Developed Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $72.59 billion in assets, Vanguard FTSE Emerging Markets ETF has $74.17 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
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 Market 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 Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
A smart beta exchange traded fund, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed Market ETFs 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 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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Charles Schwab. It has amassed assets over $5.04 billion, making it one of the largest ETFs in the Broad Developed Market ETFs. Before fees and expenses, FNDE seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net).
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets Index.
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.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.13%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.08% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 4.08% of FNDE's total assets under management.
Performance and Risk
So far this year, FNDE has gained about 10.56%, and is up about 9.86% in the last one year (as of 08/10/2023). During this past 52-week period, the fund has traded between $23.19 and $28.35.
The ETF has a beta of 0.76 and standard deviation of 17.11% for the trailing three-year period, making it a medium risk choice in the space. With about 399 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is not a suitable option for investors seeking to outperform the Broad Developed Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $72.59 billion in assets, Vanguard FTSE Emerging Markets ETF has $74.17 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
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 Market 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.