Designed to provide broad exposure to the Foreign Small/Mid Value ETF category of the market, the Schwab Fundamental International Small Company Index ETF (FNDC) is a smart beta exchange traded fund launched on 08/13/2013.
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
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.
Because the fund has amassed over $3.15 billion, this makes it one of the largest ETFs in the Foreign Small/Mid Value ETF. FNDC is managed by Charles Schwab. FNDC, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex-U.S. Small Co. Index (Net).
The RAFI Fundamental High Liquidity Developed ex US Small Index measures the performance of small non-U.S. developed market companies based on their fundamental size and weight.
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 0.39% for FNDC, making it one of the cheaper products in the space.
FNDC's 12-month trailing dividend yield is 3.38%.
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.
Looking at individual holdings, Celestica Inc (CLS) accounts for about 0.28% of total assets, followed by Rolls-Royce Holdings Plc (RR.) and Hanwha Aerospace Ltd.
FNDC's top 10 holdings account for about 1.91% of its total assets under management.
The ETF has gained about 6.30% and it's up approximately 6.04% so far this year and in the past one year (as of 04/02/2025), respectively. FNDC has traded between $33.34 and $38.50 during this last 52-week period.
FNDC has a beta of 0.80 and standard deviation of 16% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1995 holdings, it effectively diversifies company-specific risk.
Schwab Fundamental International Small Company Index ETF is a reasonable option for investors seeking to outperform the Foreign Small/Mid Value ETF segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional International Small Cap Value ETF (DISV) tracks ---------------------------------------- and the Avantis International Small Cap Value ETF (AVDV) tracks ----------------------------------------. Dimensional International Small Cap Value ETF has $2.57 billion in assets, Avantis International Small Cap Value ETF has $7.63 billion. DISV has an expense ratio of 0.42% and AVDV charges 0.36%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Small/Mid Value ETF.
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 Small Company Index ETF (FNDC): ETF Research Reports
Celestica, Inc. (CLS) : Free Stock Analysis Report
Avantis International Small Cap Value ETF (AVDV): ETF Research Reports
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