Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the Schwab Fundamental International Equity ETF (FNDF) is a smart beta exchange traded fund launched on 08/13/2013.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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.
Managed by Charles Schwab, FNDF has amassed assets over $13.64 billion, making it one of the largest ETFs in the Broad Developed World ETFs. FNDF, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex US Large Co. Index (Net).
The RAFI Fundamental High Liquidity Developed ex US Large Index measures the performance of large non-U.S. developed market companies based on their fundamental size and weight.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.90%.
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.
Taking into account individual holdings, Shell Plc (SHEL) accounts for about 2.27% of the fund's total assets, followed by Samsung Electronics Ltd and Toyota Motor Corp.
The top 10 holdings account for about 11.09% of total assets under management.
The ETF has added roughly 5.81% and was up about 10.05% so far this year and in the past one year (as of 12/11/2024), respectively. FNDF has traded between $32.48 and $37.71 during this last 52-week period.
The ETF has a beta of 0.86 and standard deviation of 16.18% for the trailing three-year period, making it a medium risk choice in the space. With about 979 holdings, it effectively diversifies company-specific risk.
Schwab Fundamental International Equity 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 $77.59 billion in assets, Vanguard FTSE Developed Markets ETF has $138.23 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.
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 Equity ETF (FNDF): ETF Research Reports
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
Vanguard Total International Stock ETF (VXUS): ETF Research Reports
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
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