Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Schwab Fundamental U.S. Broad Market Index ETF (
FNDB Quick Quote FNDB - 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
Because the fund has amassed over $390.25 million, this makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB is managed by Charles Schwab. Before fees and expenses, FNDB 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
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 cousins, other things remaining the same.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.
FNDB's 12-month trailing dividend yield is 1.58%.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market Index ETF return is roughly 27.33% so far, and it's up approximately 42.15% over the last 12 months (as of 10/18/2021). FNDB has traded between $37.44 and $55.86 in this past 52-week period.
FNDB has a beta of 1.09 and standard deviation of 23.73% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1657 holdings, it effectively diversifies company-specific risk.
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.
Dimensional U.S. Targeted Value ETF (
DFAT Quick Quote DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF ( IUSV Quick Quote IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $6.30 billion in assets, iShares Core S&P U.S. Value ETF has $10.95 billion. DFAT has an expense ratio of 0.34% 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.
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.