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Is Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
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Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Charles Schwab. It has amassed assets over $5.54 billion, making it one of the largest ETFs in the Broad Emerging 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
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 on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
It's 12-month trailing dividend yield comes in at 4.65%.
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.
Looking at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.78% of total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 24.55% of FNDE's total assets under management.
Performance and Risk
The ETF has gained about 1.92% and is up about 9.64% so far this year and in the past one year (as of 04/15/2024), respectively. FNDE has traded between $25.33 and $28.48 during this last 52-week period.
The ETF has a beta of 0.77 and standard deviation of 16.32% for the trailing three-year period, making it a medium risk choice in the space. With about 396 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $75.45 billion in assets, iShares Core MSCI Emerging Markets ETF has $75.38 billion. VWO has an expense ratio of 0.08% and IEMG charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging 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?
Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) is a smart beta exchange traded fund launched on 08/13/2013.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Charles Schwab. It has amassed assets over $5.54 billion, making it one of the largest ETFs in the Broad Emerging 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
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 on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
It's 12-month trailing dividend yield comes in at 4.65%.
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.
Looking at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.78% of total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
Its top 10 holdings account for approximately 24.55% of FNDE's total assets under management.
Performance and Risk
The ETF has gained about 1.92% and is up about 9.64% so far this year and in the past one year (as of 04/15/2024), respectively. FNDE has traded between $25.33 and $28.48 during this last 52-week period.
The ETF has a beta of 0.77 and standard deviation of 16.32% for the trailing three-year period, making it a medium risk choice in the space. With about 396 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $75.45 billion in assets, iShares Core MSCI Emerging Markets ETF has $75.38 billion. VWO has an expense ratio of 0.08% and IEMG charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging 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.