HomeMost PopularIs Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF...

Is Schwab Fundamental U.S. Broad Market Index ETF (FNDB) a Strong ETF Right Now?

Actionable Trade Ideas

always free

Launched on 08/13/2013, the Schwab Fundamental U.S. Broad Market Index ETF (FNDB) is a smart beta exchange traded fund offering 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Charles Schwab, and has been able to amass over $744.94 million, which makes it one of the larger ETFs in the Style Box – All Cap Value. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.

The Russell RAFI US Index measures the performance of the constituent companies by fundamental overall company scores.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund’s return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things 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.

FNDB’s 12-month trailing dividend yield is 1.73%.

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.

FNDB’s heaviest allocation is in the Financials sector, which is about 19.80% of the portfolio. Its Information Technology and Industrials round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 3.44% of total assets, followed by Microsoft Corp (MSFT) and Meta Platforms Inc Class A (META).

The top 10 holdings account for about 19.22% of total assets under management.

Performance and Risk

Year-to-date, the Schwab Fundamental U.S. Broad Market Index ETF has added roughly 6.92% so far, and is up about 23.12% over the last 12 months (as of 05/29/2024). FNDB has traded between $52.56 and $66.26 in this past 52-week period.

The ETF has a beta of 1.02 and standard deviation of 16.04% for the trailing three-year period, making it a medium risk choice in the space. With about 1682 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) tracks β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $9.89 billion in assets, iShares Core S&P U.S. Value ETF has $17.16 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.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Schwab Fundamental U.S. Broad Market Index ETF (FNDB): ETF Research Reports

Apple Inc. (AAPL) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports

Dimensional U.S. Targeted Value ETF (DFAT): ETF Research Reports

Meta Platforms, Inc. (META) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.