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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 $6.79 billion, making it one of the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 1.54%.
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.
This ETF has heaviest allocation to the Industrials sector--about 21.50% of the portfolio. Consumer Discretionary and Financials round out the top three.
Looking at individual holdings, Diversified Healthcare Trust (DHC - Free Report) accounts for about 0.55% of total assets, followed by Super Micro Computer Inc (SMCI - Free Report) and Xpo Inc (XPO - Free Report) .
The top 10 holdings account for about 3.67% of total assets under management.
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 Company Index measures the performance of the small company size segment by fundamental overall company scores.
The ETF has gained about 7.65% so far this year and it's up approximately 2.15% in the last one year (as of 11/27/2023). In the past 52-week period, it has traded between $44.98 and $53.63.
The ETF has a beta of 1.21 and standard deviation of 22.04% for the trailing three-year period, making it a medium risk choice in the space. With about 990 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company Index ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNDA is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $10.81 billion in assets, Vanguard Small-Cap Value ETF has $24.50 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 $6.79 billion, making it one of the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 1.54%.
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.
This ETF has heaviest allocation to the Industrials sector--about 21.50% of the portfolio. Consumer Discretionary and Financials round out the top three.
Looking at individual holdings, Diversified Healthcare Trust (DHC - Free Report) accounts for about 0.55% of total assets, followed by Super Micro Computer Inc (SMCI - Free Report) and Xpo Inc (XPO - Free Report) .
The top 10 holdings account for about 3.67% of total assets under management.
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 Company Index measures the performance of the small company size segment by fundamental overall company scores.
The ETF has gained about 7.65% so far this year and it's up approximately 2.15% in the last one year (as of 11/27/2023). In the past 52-week period, it has traded between $44.98 and $53.63.
The ETF has a beta of 1.21 and standard deviation of 22.04% for the trailing three-year period, making it a medium risk choice in the space. With about 990 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company Index ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FNDA is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $10.81 billion in assets, Vanguard Small-Cap Value ETF has $24.50 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.