Is Schwab Fundamental U.S. Small Company ETF (FNDA) a Strong ETF Right Now?

A smart beta exchange traded fund, the Schwab Fundamental U.S. Small Company ETF (FNDA) debuted on 08/13/2013, and offers 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.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

FNDA is managed by Charles Schwab, and this fund has amassed over $8.29 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Russell RAFI US Small Co. Index.

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

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.

FNDA's 12-month trailing dividend yield is 1.51%.

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.

FNDA's heaviest allocation is in the Industrials sector, which is about 20% of the portfolio. Its Financials and Consumer Discretionary round out the top three.

Taking into account individual holdings, Verisign Inc (VRSN) accounts for about 0.41% of the fund's total assets, followed by Geo Group Inc (GEO) and Gamestop Corp Class A (GME).

FNDA's top 10 holdings account for about 3.18% of its total assets under management.

Performance and Risk

Year-to-date, the Schwab Fundamental U.S. Small Company ETF has lost about -4.54% so far, and is up about 1.10% over the last 12 months (as of 05/20/2025). FNDA has traded between $23.85 and $32.42 in this past 52-week period.

FNDA has a beta of 1.10 and standard deviation of 21.67% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 993 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.

Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.58 billion in assets, Vanguard Small-Cap Value ETF has $29.33 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.

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.

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

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