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Is Schwab Fundamental U.S. Small Company ETF (FNDA) a Strong ETF Right Now?
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The Schwab Fundamental U.S. Small Company ETF (FNDA - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Charles Schwab, FNDA has amassed assets over $9.08 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses.
The RAFI Fundamental High Liquidity US Small Index measures the performance of small U.S. 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.
Annual operating expenses for FNDA are 0.25%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.55%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 20.10% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, United Airlines Holdings Inc (UAL - Free Report) accounts for about 0.44% of total assets, followed by Geo Group Inc (GEO - Free Report) and Royal Caribbean Group Ltd (RCL - Free Report) .
FNDA's top 10 holdings account for about 3.35% of its total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Small Company ETF has lost about -1.28% so far, and is up roughly 11.54% over the last 12 months (as of 01/14/2025). FNDA has traded between $26.18 and $32.42 in this past 52-week period.
The ETF has a beta of 1.20 and standard deviation of 21.20% for the trailing three-year period, making it a medium risk choice in the space. With about 1032 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Avantis U.S. Small Cap Value ETF (AVUV - Free Report) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.14 billion in assets, Vanguard Small-Cap Value ETF has $30.84 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
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 - Small 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. Small Company ETF (FNDA) a Strong ETF Right Now?
The Schwab Fundamental U.S. Small Company ETF (FNDA - Free Report) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Charles Schwab, FNDA has amassed assets over $9.08 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses.
The RAFI Fundamental High Liquidity US Small Index measures the performance of small U.S. 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.
Annual operating expenses for FNDA are 0.25%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.55%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 20.10% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, United Airlines Holdings Inc (UAL - Free Report) accounts for about 0.44% of total assets, followed by Geo Group Inc (GEO - Free Report) and Royal Caribbean Group Ltd (RCL - Free Report) .
FNDA's top 10 holdings account for about 3.35% of its total assets under management.
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Small Company ETF has lost about -1.28% so far, and is up roughly 11.54% over the last 12 months (as of 01/14/2025). FNDA has traded between $26.18 and $32.42 in this past 52-week period.
The ETF has a beta of 1.20 and standard deviation of 21.20% for the trailing three-year period, making it a medium risk choice in the space. With about 1032 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental U.S. Small Company ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Avantis U.S. Small Cap Value ETF (AVUV - Free Report) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.14 billion in assets, Vanguard Small-Cap Value ETF has $30.84 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
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 - Small 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.