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Should Schwab Fundamental U.S. Small Company Index ETF (FNDA) Be on Your Investing Radar?
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If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the Schwab Fundamental U.S. Small Company Index ETF (FNDA - Free Report) , a passively managed exchange traded fund launched on 08/13/2013.
The fund is sponsored by Charles Schwab. It has amassed assets over $4.87 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they 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 0.94%.
Performance and Risk
FNDA seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses. The Russell RAFI US Small Co. Index measures the performance of the small company size segment by fundamental overall company scores.
The ETF return is roughly 30.36% so far this year and is up about 64.64% in the last one year (as of 10/29/2021). In the past 52-week period, it has traded between $33.82 and $56.06.
The ETF has a beta of 1.27 and standard deviation of 29.11% for the trailing three-year period, making it a medium risk choice in the space. With about 937 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FNDA is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard SmallCap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $16.07 billion in assets, Vanguard SmallCap Value ETF has $25.84 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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. Small Company Index ETF (FNDA) Be on Your Investing Radar?
If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the Schwab Fundamental U.S. Small Company Index ETF (FNDA - Free Report) , a passively managed exchange traded fund launched on 08/13/2013.
The fund is sponsored by Charles Schwab. It has amassed assets over $4.87 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they 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 0.94%.
Performance and Risk
FNDA seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses. The Russell RAFI US Small Co. Index measures the performance of the small company size segment by fundamental overall company scores.
The ETF return is roughly 30.36% so far this year and is up about 64.64% in the last one year (as of 10/29/2021). In the past 52-week period, it has traded between $33.82 and $56.06.
The ETF has a beta of 1.27 and standard deviation of 29.11% for the trailing three-year period, making it a medium risk choice in the space. With about 937 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FNDA is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard SmallCap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $16.07 billion in assets, Vanguard SmallCap Value ETF has $25.84 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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.