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Is Schwab Fundamental U.S. Broad Market ETF (FNDB) a Strong ETF Right Now?
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The Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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.
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
Because the fund has amassed over $795.13 million, this makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB is managed by Charles Schwab. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based companies based on their fundamental size and weight.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.25% 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 1.70%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNDB's heaviest allocation is in the Financials sector, which is about 20.20% of the portfolio. Its Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.63% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
The top 10 holdings account for about 18.68% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market ETF has added roughly 12.24% so far, and is up about 17.61% over the last 12 months (as of 07/31/2024). FNDB has traded between $52.56 and $68.61 in this past 52-week period.
FNDB has a beta of 1 and standard deviation of 15.81% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1733 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market 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 $10.71 billion in assets, iShares Core S&P U.S. Value ETF has $18.31 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 ETF (FNDB) a Strong ETF Right Now?
The Schwab Fundamental U.S. Broad Market ETF (FNDB - Free Report) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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.
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
Because the fund has amassed over $795.13 million, this makes it one of the larger ETFs in the Style Box - All Cap Value. FNDB is managed by Charles Schwab. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based companies based on their fundamental size and weight.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.25% 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 1.70%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FNDB's heaviest allocation is in the Financials sector, which is about 20.20% of the portfolio. Its Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.63% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Berkshire Hathaway Inc Class B (BRK/B).
The top 10 holdings account for about 18.68% of total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market ETF has added roughly 12.24% so far, and is up about 17.61% over the last 12 months (as of 07/31/2024). FNDB has traded between $52.56 and $68.61 in this past 52-week period.
FNDB has a beta of 1 and standard deviation of 15.81% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1733 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Broad Market 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 $10.71 billion in assets, iShares Core S&P U.S. Value ETF has $18.31 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.