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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
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Designed to provide broad exposure to the World ETFs category of the market, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
FNDC is managed by Charles Schwab, and this fund has amassed over $2.93 billion, which makes it one of the larger ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index.
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.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
FNDC's 12-month trailing dividend yield is 2.21%.
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.
When you look at individual holdings, Meritz Financial Group Inc accounts for about 0.27% of the fund's total assets, followed by Disco Corp and H2o Retailing Corp.
Performance and Risk
The ETF has added about 5.88% and was up about 6.25% so far this year and in the past one year (as of 08/28/2023), respectively. FNDC has traded between $26.94 and $34.74 during this last 52-week period.
The ETF has a beta of 0.93 and standard deviation of 17.06% for the trailing three-year period, making it a low risk choice in the space. With about 1779 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $56.59 billion in assets, Vanguard FTSE Developed Markets ETF has $111.17 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World 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 International Small Company Index ETF (FNDC) a Strong ETF Right Now?
Designed to provide broad exposure to the World ETFs category of the market, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
FNDC is managed by Charles Schwab, and this fund has amassed over $2.93 billion, which makes it one of the larger ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap Index.
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.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
FNDC's 12-month trailing dividend yield is 2.21%.
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.
When you look at individual holdings, Meritz Financial Group Inc accounts for about 0.27% of the fund's total assets, followed by Disco Corp and H2o Retailing Corp.
Performance and Risk
The ETF has added about 5.88% and was up about 6.25% so far this year and in the past one year (as of 08/28/2023), respectively. FNDC has traded between $26.94 and $34.74 during this last 52-week period.
The ETF has a beta of 0.93 and standard deviation of 17.06% for the trailing three-year period, making it a low risk choice in the space. With about 1779 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $56.59 billion in assets, Vanguard FTSE Developed Markets ETF has $111.17 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World 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.