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Should Schwab Fundamental U.S. Large Company Index ETF (FNDX) Be on Your Investing Radar?
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The Schwab Fundamental U.S. Large Company Index ETF (FNDX - Free Report) was launched on 08/13/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Charles Schwab. It has amassed assets over $13.75 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.80%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 18.90% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.62% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
The top 10 holdings account for about 21.62% of total assets under management.
Performance and Risk
FNDX seeks to match the performance of the Russell RAFI US Large Co. Index before fees and expenses. The Russell RAFI US Large Company Index measures the performance of the large company size segment by fundamental overall company scores.
The ETF return is roughly 1.31% so far this year and was up about 13.26% in the last one year (as of 01/29/2024). In the past 52-week period, it has traded between $52.49 and $62.78.
The ETF has a beta of 1 and standard deviation of 16.24% for the trailing three-year period, making it a medium risk choice in the space. With about 730 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Large Company Index ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNDX is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $52.57 billion in assets, Vanguard Value ETF has $107.24 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Should Schwab Fundamental U.S. Large Company Index ETF (FNDX) Be on Your Investing Radar?
The Schwab Fundamental U.S. Large Company Index ETF (FNDX - Free Report) was launched on 08/13/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Charles Schwab. It has amassed assets over $13.75 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.80%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 18.90% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.62% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
The top 10 holdings account for about 21.62% of total assets under management.
Performance and Risk
FNDX seeks to match the performance of the Russell RAFI US Large Co. Index before fees and expenses. The Russell RAFI US Large Company Index measures the performance of the large company size segment by fundamental overall company scores.
The ETF return is roughly 1.31% so far this year and was up about 13.26% in the last one year (as of 01/29/2024). In the past 52-week period, it has traded between $52.49 and $62.78.
The ETF has a beta of 1 and standard deviation of 16.24% for the trailing three-year period, making it a medium risk choice in the space. With about 730 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Large Company Index ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNDX is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $52.57 billion in assets, Vanguard Value ETF has $107.24 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.