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Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?
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Making its debut on 08/13/2013, smart beta exchange traded fund Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) provides investors broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Charles Schwab, and has been able to amass over $742.11 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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 FNDB are 0.25%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.70%.
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.
For FNDB, it has heaviest allocation in the Financials sector --about 19.30% of the portfolio --while Information Technology and Industrials round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.29% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
Its top 10 holdings account for approximately 20.08% of FNDB's total assets under management.
Performance and Risk
So far this year, FNDB return is roughly 8.89%, and was up about 28.45% in the last one year (as of 03/29/2024). During this past 52-week period, the fund has traded between $52.56 and $66.26.
The ETF has a beta of 1.01 and standard deviation of 16.15% for the trailing three-year period, making it a medium risk choice in the space. With about 1689 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market Index ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $10.04 billion in assets, iShares Core S&P U.S. Value ETF has $16.96 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
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 U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?
Making its debut on 08/13/2013, smart beta exchange traded fund Schwab Fundamental U.S. Broad Market Index ETF (FNDB - Free Report) provides investors broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Charles Schwab, and has been able to amass over $742.11 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB seeks to match the performance of the Russell RAFI US Index before fees and expenses.
The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.
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 FNDB are 0.25%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.70%.
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.
For FNDB, it has heaviest allocation in the Financials sector --about 19.30% of the portfolio --while Information Technology and Industrials round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.29% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
Its top 10 holdings account for approximately 20.08% of FNDB's total assets under management.
Performance and Risk
So far this year, FNDB return is roughly 8.89%, and was up about 28.45% in the last one year (as of 03/29/2024). During this past 52-week period, the fund has traded between $52.56 and $66.26.
The ETF has a beta of 1.01 and standard deviation of 16.15% for the trailing three-year period, making it a medium risk choice in the space. With about 1689 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market Index ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $10.04 billion in assets, iShares Core S&P U.S. Value ETF has $16.96 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
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.