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Is Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed Market ETFs 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Charles Schwab, FNDE has amassed assets over $4.87 billion, making it one of the largest ETFs in the Broad Developed Market ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net).
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets Index.
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.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.37%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.08% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
The top 10 holdings account for about 4.08% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental Emerging Markets Large Company Index ETF has gained about 5.68% so far, and is up roughly 13.61% over the last 12 months (as of 10/10/2023). FNDE has traded between $23.19 and $28.35 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 17.03% for the trailing three-year period, which makes FNDE a medium risk choice in this particular space. With about 399 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is not a suitable option for investors seeking to outperform the Broad Developed Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $68.42 billion in assets, Vanguard FTSE Emerging Markets ETF has $69.72 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
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 Market 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 Emerging Markets Large Company Index ETF (FNDE) a Strong ETF Right Now?
A smart beta exchange traded fund, the Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE - Free Report) debuted on 08/13/2013, and offers broad exposure to the Broad Developed Market ETFs 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Charles Schwab, FNDE has amassed assets over $4.87 billion, making it one of the largest ETFs in the Broad Developed Market ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net).
The Russell RAFI Emerging Markets Large Company Index (Net) ranks companies in the Russell Emerging Markets Index by measures of fundamental size and tracks the performance of those companies whose fundamental scores are in the top 87.5% of the Russell Emerging Markets Index.
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.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.37%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.08% of the fund's total assets, followed by China Construction Bank Corp H and Hon Hai Precision Industry Ltd.
The top 10 holdings account for about 4.08% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental Emerging Markets Large Company Index ETF has gained about 5.68% so far, and is up roughly 13.61% over the last 12 months (as of 10/10/2023). FNDE has traded between $23.19 and $28.35 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 17.03% for the trailing three-year period, which makes FNDE a medium risk choice in this particular space. With about 399 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental Emerging Markets Large Company Index ETF is not a suitable option for investors seeking to outperform the Broad Developed Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $68.42 billion in assets, Vanguard FTSE Emerging Markets ETF has $69.72 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
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 Market 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.