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Is Schwab Fundamental International Small Company Index ETF (FNDC) a Strong ETF Right Now?
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Launched on 08/13/2013, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) is a smart beta exchange traded fund offering broad exposure to the World ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $2.92 billion, making it one of the larger ETFs in the World ETFs. FNDC, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.26%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Meritz Financial Group Inc accounts for about 0.28% of the fund's total assets, followed by Celestica Inc (CLS - Free Report) and Rolls-Royce Holdings Plc (RR.).
Its top 10 holdings account for approximately 2.04% of FNDC's total assets under management.
Performance and Risk
So far this year, FNDC has added about 3.48%, and is up about 13.62% in the last one year (as of 11/07/2023). During this past 52-week period, the fund has traded between $28.96 and $34.74.
The ETF has a beta of 0.92 and standard deviation of 16.87% for the trailing three-year period, making it a low risk choice in the space. With about 1766 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 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 $57.31 billion in assets, Vanguard FTSE Developed Markets ETF has $110.44 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 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?
Launched on 08/13/2013, the Schwab Fundamental International Small Company Index ETF (FNDC - Free Report) is a smart beta exchange traded fund offering broad exposure to the World ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Charles Schwab. FNDC has been able to amass assets over $2.92 billion, making it one of the larger ETFs in the World ETFs. FNDC, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FNDC are 0.39%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.26%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Meritz Financial Group Inc accounts for about 0.28% of the fund's total assets, followed by Celestica Inc (CLS - Free Report) and Rolls-Royce Holdings Plc (RR.).
Its top 10 holdings account for approximately 2.04% of FNDC's total assets under management.
Performance and Risk
So far this year, FNDC has added about 3.48%, and is up about 13.62% in the last one year (as of 11/07/2023). During this past 52-week period, the fund has traded between $28.96 and $34.74.
The ETF has a beta of 0.92 and standard deviation of 16.87% for the trailing three-year period, making it a low risk choice in the space. With about 1766 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 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 $57.31 billion in assets, Vanguard FTSE Developed Markets ETF has $110.44 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 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.