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Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Hot ETF Right Now?
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Designed to provide broad exposure to the Total Market (U.S.) ETFs 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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 managed by Charles Schwab, and has been able to amass over $262.47 M, which makes it one of the larger ETFs in the Total Market (U.S.) ETFs. Before fees and expenses, this particular fund 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.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.
FNDB's 12-month trailing dividend yield is 2.11%.
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 in the Information Technology sector - about 15.10% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 3.40% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Chevron Corp Common Stock Usd.75 (CVX - Free Report) .
Its top 10 holdings account for approximately 18.81% of FNDB's total assets under management.
Performance and Risk
The ETF return is roughly 1.44% and was up about 7.65% so far this year and in the past one year (as of 11/16/2018), respectively. FNDB has traded between $35.40 and $40.14 during this last 52-week period.
The fund has a beta of 0.97 and standard deviation of 11.78% for the trailing three-year period, which makes FNDB a medium risk choice in this particular space. With about 1567 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 Total Market (U.S.) ETFs 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 $747.76 M in assets, iShares Core S&P U.S. Value ETF has $4.71 B. PEY has an expense ratio of 0.54% 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 Total Market (U.S.) 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 U.S. Broad Market Index ETF (FNDB) a Hot ETF Right Now?
Designed to provide broad exposure to the Total Market (U.S.) ETFs 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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 managed by Charles Schwab, and has been able to amass over $262.47 M, which makes it one of the larger ETFs in the Total Market (U.S.) ETFs. Before fees and expenses, this particular fund 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.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.
FNDB's 12-month trailing dividend yield is 2.11%.
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 in the Information Technology sector - about 15.10% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 3.40% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Chevron Corp Common Stock Usd.75 (CVX - Free Report) .
Its top 10 holdings account for approximately 18.81% of FNDB's total assets under management.
Performance and Risk
The ETF return is roughly 1.44% and was up about 7.65% so far this year and in the past one year (as of 11/16/2018), respectively. FNDB has traded between $35.40 and $40.14 during this last 52-week period.
The fund has a beta of 0.97 and standard deviation of 11.78% for the trailing three-year period, which makes FNDB a medium risk choice in this particular space. With about 1567 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 Total Market (U.S.) ETFs 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 $747.76 M in assets, iShares Core S&P U.S. Value ETF has $4.71 B. PEY has an expense ratio of 0.54% 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 Total Market (U.S.) 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.