Is Schwab Fundamental U.S. Small Company ETF (FNDA) a Strong ETF Right Now?
The Schwab Fundamental U.S. Small Company 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?
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.
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.
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.
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.
Fund Sponsor & Index
FNDA is managed by Charles Schwab, and this fund has amassed over $9.36 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. FNDA seeks to match the performance of the Russell RAFI US Small Co. Index before fees and expenses.
The RAFI Fundamental High Liquidity US Small Index measures the performance of small U.S. companies based on their fundamental size and weight.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.25%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.20%.
Sector Exposure and Top Holdings
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 Industrials sector - about 20.2% of the portfolio. Financials and Information Technology round out the top three.
Taking into account individual holdings, Lumentum Holdings Inc (LITE) accounts for about 1.08% of the fund's total assets, followed by Compass Inc Class A (COMP) and Coherent Corp (COHR).
The top 10 holdings account for about 5.23% of total assets under management.
Performance and Risk
The ETF has added about 4.22% and was up about 19.03% so far this year and in the past one year (as of 04/03/2026), respectively. FNDA has traded between $23.85 and $34.92 during this last 52-week period.
The ETF has a beta of 1.04 and standard deviation of 19.43% for the trailing three-year period, making it a medium risk choice in the space. With about 889 holdings, it effectively diversifies company-specific risk .
Alternatives
Schwab Fundamental U.S. Small Company 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 Index Fund ETF Shares (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $12.61 billion in assets, Vanguard Small-Cap Value Index Fund ETF Shares has $32.66 billion. IWN has an expense ratio of 0.24% and VBR changes 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 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.Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Get it now >>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 ETF (FNDA): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
