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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $2.43 billion, making it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, FNDC seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap 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.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Bombardier Inc Class B (BBD.B) accounts for about 0.87% of total assets, followed by Saipem (SPM) and Capitaland Investment Ltd (9CI).
The top 10 holdings account for about 3.4% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental International Small Company Index ETF has lost about -21.11% so far, and is down about -24.90% over the last 12 months (as of 09/19/2022). FNDC has traded between $29.39 and $40.19 in this past 52-week period.
The ETF has a beta of 0.91 and standard deviation of 22.02% for the trailing three-year period, making it a low risk choice in the space. With about 1841 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $44.92 billion in assets, Vanguard FTSE Developed Markets ETF has $89.71 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World 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 International Small Company Index ETF (FNDC) a Strong ETF Right Now?
A smart beta exchange traded fund, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $2.43 billion, making it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, FNDC seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The Russell RAFI Developed ex US Small Company Index (Net) measures the performance of the small company size segment by fundamental overall company scores, which are created using as the universe the developed ex U.S. companies in the FTSE Global Total Cap 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.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Bombardier Inc Class B (BBD.B) accounts for about 0.87% of total assets, followed by Saipem (SPM) and Capitaland Investment Ltd (9CI).
The top 10 holdings account for about 3.4% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental International Small Company Index ETF has lost about -21.11% so far, and is down about -24.90% over the last 12 months (as of 09/19/2022). FNDC has traded between $29.39 and $40.19 in this past 52-week period.
The ETF has a beta of 0.91 and standard deviation of 22.02% for the trailing three-year period, making it a low risk choice in the space. With about 1841 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $44.92 billion in assets, Vanguard FTSE Developed Markets ETF has $89.71 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World 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.