Advertisement
Canada markets closed
  • S&P/TSX

    21,899.99
    -210.12 (-0.95%)
     
  • S&P 500

    5,123.41
    -75.65 (-1.46%)
     
  • DOW

    37,983.24
    -475.84 (-1.24%)
     
  • CAD/USD

    0.7261
    -0.0043 (-0.59%)
     
  • CRUDE OIL

    85.45
    +0.43 (+0.51%)
     
  • Bitcoin CAD

    92,769.03
    -4,891.95 (-5.01%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,360.20
    -12.50 (-0.53%)
     
  • RUSSELL 2000

    2,003.17
    -39.43 (-1.93%)
     
  • 10-Yr Bond

    4.4990
    -0.0770 (-1.68%)
     
  • NASDAQ

    16,175.09
    -267.10 (-1.62%)
     
  • VOLATILITY

    17.31
    +2.40 (+16.10%)
     
  • FTSE

    7,995.58
    +71.78 (+0.91%)
     
  • NIKKEI 225

    39,523.55
    +80.92 (+0.21%)
     
  • CAD/EUR

    0.6819
    +0.0013 (+0.19%)
     

Is Schwab Fundamental U.S. Small Company Index ETF (FNDA) a Strong ETF Right Now?

The Schwab Fundamental U.S. Small Company Index ETF (FNDA) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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

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.

ADVERTISEMENT

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

Managed by Charles Schwab, FNDA has amassed assets over $7.89 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. Before fees and expenses, FNDA seeks to match the performance of the Russell RAFI US Small Co. Index.

The Russell RAFI US Small Company Index measures the performance of the small company size segment by fundamental overall company scores.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.

It has a 12-month trailing dividend yield of 1.38%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Representing 21.30% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Financials round out the top three.

Looking at individual holdings, Abercrombie And Fitch Class A (ANF) accounts for about 0.54% of total assets, followed by Diversified Healthcare Trust (DHC) and Xpo Inc (XPO).

The top 10 holdings account for about 3.54% of total assets under management.

Performance and Risk

So far this year, FNDA has lost about -0.60%, and is up about 8.77% in the last one year (as of 02/28/2024). During this past 52-week period, the fund has traded between $44.98 and $56.11.

The fund has a beta of 1.20 and standard deviation of 21.94% for the trailing three-year period, which makes FNDA a medium risk choice in this particular space. With about 961 holdings, it effectively diversifies company-specific risk.

Alternatives

Schwab Fundamental U.S. Small Company Index ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $12.10 billion in assets, Vanguard Small-Cap Value ETF has $27.15 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

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 - Small 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 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. Small Company Index ETF (FNDA): ETF Research Reports

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

XPO, Inc. (XPO) : Free Stock Analysis Report

Vanguard Small-Cap Value ETF (VBR): ETF Research Reports

iShares Russell 2000 Value ETF (IWN): ETF Research Reports

Diversified Healthcare Trust (DHC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research