Is Schwab Fundamental U.S. Large Company ETF (FNDX) a Strong ETF Right Now?

The Schwab Fundamental U.S. Large Company ETF (FNDX) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

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

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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, FNDX has amassed assets over $21.03 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Russell RAFI US Large Co. Index before fees and expenses.

The RAFI Fundamental High Liquidity US Large Index measures the performance of large U.S. companies based on their fundamental size and weight.

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 1.66%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector - about 17.9% of the portfolio. Financials and Healthcare round out the top three.

When you look at individual holdings, Apple Inc (AAPL) accounts for about 4.45% of the fund's total assets, followed by Microsoft Corp (MSFT) and Exxon Mobil Corp (XOM).

The top 10 holdings account for about 21.11% of total assets under management.

Performance and Risk

Year-to-date, the Schwab Fundamental U.S. Large Company ETF return is roughly 12.47% so far, and it's up approximately 8.55% over the last 12 months (as of 11/24/2025). FNDX has traded between $20.84 $26.94 in this past 52-week period.

FNDX has a beta of 0.93 and standard deviation of 13.68% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 731 holdings, it effectively diversifies company-specific risk .

Alternatives

Schwab Fundamental U.S. Large Company ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $69.84 billion in assets, Vanguard Value ETF has $149.49 billion. SCHD has an expense ratio of 0.06% and VTV changes 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 - Large Cap Value

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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