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Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?
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Launched on 08/13/2013, the Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Managed by Charles Schwab, FNDB has amassed assets over $300.69 M, making it one of the larger ETFs in the Style Box - All Cap Value. FNDB seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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 FNDB are 0.25%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 2.22%.
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 18.20% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 5.13% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Microsoft Corp Common Stock Usd.00000625 (MSFT - Free Report) .
The top 10 holdings account for about 18.32% of total assets under management.
Performance and Risk
The ETF return is roughly 0.45% so far this year and was up about 18.52% in the last one year (as of 02/10/2020). In the past 52-week period, it has traded between $36.18 and $42.96.
FNDB has a beta of 1.02 and standard deviation of 12.32% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1616 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 Style Box - All Cap Value 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 $951.23 M in assets, iShares Core S&P U.S. Value ETF has $6.87 B. PEY has an expense ratio of 0.53% 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 Style Box - All Cap Value.
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 Strong ETF Right Now?
Launched on 08/13/2013, the Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Managed by Charles Schwab, FNDB has amassed assets over $300.69 M, making it one of the larger ETFs in the Style Box - All Cap Value. FNDB seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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 FNDB are 0.25%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 2.22%.
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 18.20% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd.00001 (AAPL - Free Report) accounts for about 5.13% of the fund's total assets, followed by Exxon Mobil Corp Common Stock (XOM - Free Report) and Microsoft Corp Common Stock Usd.00000625 (MSFT - Free Report) .
The top 10 holdings account for about 18.32% of total assets under management.
Performance and Risk
The ETF return is roughly 0.45% so far this year and was up about 18.52% in the last one year (as of 02/10/2020). In the past 52-week period, it has traded between $36.18 and $42.96.
FNDB has a beta of 1.02 and standard deviation of 12.32% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1616 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 Style Box - All Cap Value 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 $951.23 M in assets, iShares Core S&P U.S. Value ETF has $6.87 B. PEY has an expense ratio of 0.53% 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 Style Box - All Cap Value.
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.