A smart beta exchange traded fund, the Schwab Fundamental U.S. Broad Market ETF (FNDB) debuted on 08/13/2013, and offers broad exposure to the Style Box - All Cap Value category of the market.
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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
The fund is managed by Charles Schwab. FNDB has been able to amass assets over $838.71 million, making it one of the larger ETFs in the Style Box - All Cap Value. FNDB, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
The fund has a 12-month trailing dividend yield of 1.89%.
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.
This ETF has heaviest allocation in the Financials sector - about 19.10% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL) accounts for about 4.36% of the fund's total assets, followed by Microsoft Corp (MSFT) and Berkshire Hathaway Inc Class B (BRK/B).
The top 10 holdings account for about 19.74% of total assets under management.
The ETF has lost about -5.51% so far this year and was up about 2.20% in the last one year (as of 04/10/2025). In the past 52-week period, it has traded between $20.36 and $24.70.
FNDB has a beta of 0.95 and standard deviation of 16.55% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1683 holdings, it effectively diversifies company-specific risk.
Schwab Fundamental U.S. Broad Market ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $14.30 billion in assets, iShares Core S&P U.S. Value ETF has $19.14 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
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 - All Cap Value.
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 U.S. Broad Market ETF (FNDB): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
Capital Group Dividend Value ETF (CGDV): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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