Is Schwab Fundamental International Large Company Index ETF (FNDF) a Strong ETF Right Now?
The Schwab Fundamental International Large Company Index ETF (FNDF) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
FNDF is managed by Charles Schwab, and this fund has amassed over $7.12 billion, which makes it one of the largest ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Russell RAFI Developed ex US Large Co. Index (Net).
The Russell RAFI Developed ex US Large Co. Index (Net) measures the performance of the large company size segment by fundamental overall company scores, which are created using as the universe the companies included in the Russell Developed ex-U.S. Index.
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.
Operating expenses on an annual basis are 0.25% for FNDF, making it one of the cheaper products in the space.
It’s 12-month trailing dividend yield comes in at 2.10%.
Performance and Risk
The ETF has gained about 15.17% and is up roughly 39.59% so far this year and in the past one year (as of 10/28/2021), respectively. FNDF has traded between $23.88 and $34.94 during this last 52-week period.
The fund has a beta of 0.88 and standard deviation of 22.08% for the trailing three-year period, which makes FNDF a medium risk choice in this particular space. With about 944 holdings, it effectively diversifies company-specific risk.
Schwab Fundamental International Large Company Index ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $51.35 billion in assets, Vanguard FTSE Developed Markets ETF has $105.48 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.
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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Schwab Fundamental International Large Company Index ETF (FNDF): ETF Research Reports
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
Vanguard Total International Stock ETF (VXUS): ETF Research Reports
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