Designed to provide broad exposure to the Foreign Large Value ETF category of the market, the Schwab Fundamental International Equity 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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $14.02 billion, this makes it the largest ETF in the Foreign Large Value ETF. FNDF is managed by Charles Schwab. FNDF, before fees and expenses, seeks to match the performance of the Russell RAFI Developed ex US Large Co. Index (Net).
The RAFI Fundamental High Liquidity Developed ex US Large Index measures the performance of large non-U.S. developed market 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.
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 3.78%.
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.
When you look at individual holdings, Shell Plc (SHEL) accounts for about 2.23% of the fund's total assets, followed by Samsung Electronics Ltd and Toyota Motor Corp.
Its top 10 holdings account for approximately 11.77% of FNDF's total assets under management.
Performance and Risk
The ETF has gained about 6.02% so far this year and is up roughly 5.13% in the last one year (as of 04/15/2025). In the past 52-week period, it has traded between $32.25 and $37.71.
The fund has a beta of 0.75 and standard deviation of 16.74% for the trailing three-year period, which makes FNDF a medium risk choice in this particular space. With about 978 holdings, it effectively diversifies company-specific risk.
Alternatives
Schwab Fundamental International Equity ETF is a reasonable option for investors seeking to outperform the Foreign Large Value ETF segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard International High Dividend Yield ETF (VYMI) tracks FTSE All-World ex US High Dividend Yield Index and the Dimensional International Value ETF (DFIV) tracks ----------------------------------------. Vanguard International High Dividend Yield ETF has $8.81 billion in assets, Dimensional International Value ETF has $9.27 billion. VYMI has an expense ratio of 0.17% and DFIV charges 0.27%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Large Value ETF.
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.
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Schwab Fundamental International Equity ETF (FNDF): ETF Research Reports Vanguard International High Dividend Yield ETF (VYMI): ETF Research Reports Dimensional International Value ETF (DFIV): ETF Research Reports Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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