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

Zacks Equity Research
·4-min read

Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the Schwab Fundamental International Large Company Index ETF (FNDF) is a smart beta exchange traded fund launched on 08/13/2013.

What Are Smart Beta ETFs?

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.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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.

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

The fund is managed by Charles Schwab. FNDF has been able to amass assets over $13.45 billion, making it one of the largest ETFs in the Broad Developed World ETFs. Before fees and expenses, FNDF seeks to match the performance of the Russell RAFI Developed ex US Large Co. Index (Net).

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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 3.17%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Looking at individual holdings, Shell Plc (SHEL) accounts for about 2.21% of total assets, followed by Toyota Motor Corp and Samsung Electronics Ltd.

The top 10 holdings account for about 12.37% of total assets under management.

Performance and Risk

So far this year, FNDF has added about 7.65%, and is up about 16.63% in the last one year (as of 06/07/2024). During this past 52-week period, the fund has traded between $30.23 and $36.51.

FNDF has a beta of 0.87 and standard deviation of 16.20% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 942 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 $72.97 billion in assets, Vanguard FTSE Developed Markets ETF has $135.78 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.

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 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

Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report

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