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Is Schwab Fundamental International Large Company Index ETF (FNDF) a Strong ETF Right Now?

·4 min read

The Schwab Fundamental International Large Company Index ETF (FNDF) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer 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.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Managed by Charles Schwab, FNDF has amassed assets over $7.48 billion, making it one of the largest ETFs in the Broad Developed World ETFs. This particular fund seeks to match the performance of the Russell RAFI Developed ex US Large Co. Index (Net) before fees and expenses.

The Russell RAFI Developed ex US Large Company 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 this ETF, which makes it one of the cheaper products in the space.

It's 12-month trailing dividend yield comes in at 3.51%.

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.

When you look at individual holdings, Samsung Electronics Co Ltd Common Stock Krw100.0 accounts for about 1.70% of the fund's total assets, followed by Toyota Motor Corp Common Stock and Royal Dutch Shell Plc A Shs Common Stock Eur.07 (RDSA).

The top 10 holdings account for about 11.45% of total assets under management.

Performance and Risk

The ETF has added about 0.15% so far this year and is up roughly 8.05% in the last one year (as of 02/28/2022). In the past 52-week period, it has traded between $31.31 and $34.94.

The fund has a beta of 0.86 and standard deviation of 22% for the trailing three-year period, which makes FNDF a medium risk choice in this particular space. With about 948 holdings, it effectively diversifies company-specific risk.

Alternatives

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 $52.09 billion in assets, Vanguard FTSE Developed Markets ETF has $106.36 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.

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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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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