Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE)

ETF Schwab Fundamental Emerging Markets Large Company Index ETF

Profile:

ETF Schwab Fundamental Emerging Markets Large Company Index ETF (SCHE) is a passively managed exchange-traded fund that seeks to track the performance of the FTSE Emerging Index. This index comprises large-cap stocks from emerging markets across various sectors, excluding state-owned enterprises and companies with low ESG ratings. SCHE invests in approximately 300 of the largest and most liquid stocks in these markets.

Objective:

This ETF aims to provide long-term capital appreciation by investing in a well-diversified portfolio of emerging market equities. It targets investors seeking broad exposure to the emerging markets equities segment with a focus on fundamental strength and ESG compliance.

Issuer:

• Schwab Asset Management, Inc. (SAM):
  • Reputation and Reliability: SAM is a subsidiary of the Charles Schwab Corporation, a leading financial services company with a strong reputation for reliability and innovation.
  • Management: The ETF is managed by an experienced team of investment professionals at SAM who have a deep understanding of emerging markets.

Market Share:

SCHE holds an estimated market share of 0.3% within the Emerging Markets Equity ETF category.

Total Net Assets:

As of November 11, 2023, SCHE had approximately $4.21 billion in total net assets.

Moat:

• Low fees: SCHE boasts an expense ratio of 0.12%, significantly lower than the average for its category.
• Focus on fundamentals and ESG: The inclusion criteria based on financial strength and ESG ratings helps mitigate potential risks and enhance long-term performance.
• Diversification: The ETF offers broad exposure to a diverse range of large-cap companies across multiple emerging markets.

Financial Performance:

• Historical performance: Since inception in July 2021, SCHE has delivered a total return of around 13.5%, outperforming the FTSE Emerging Index by approximately 4%.
• Benchmark comparison: Compared to the benchmark, SCHE has shown lower volatility and higher risk-adjusted returns.

Growth Trajectory:

The emerging markets equities segment is expected to witness continued growth in the coming years, driven by economic development and increasing investment opportunities. However, short-term performance can be affected by geopolitical factors and global economic conditions.

Liquidity:

• Average Trading Volume: SCHE has an average daily trading volume of approximately 500,000 shares, indicating good liquidity.
• Bid-Ask Spread: The typical bid-ask spread is around 0.03%, suggesting low transaction costs.

Market Dynamics:

• Economic growth in emerging markets: The overall economic growth of emerging markets can significantly impact the ETF's performance.
• Global geopolitical events: Political events and conflicts within or around emerging markets can lead to volatility.
• US interest rate policies: Rising interest rates in the US can affect capital flows to emerging markets.

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG) - Market Share: 19.9%
• Vanguard FTSE Emerging Markets ETF (VWO) - Market Share: 11.3%
• Xtrackers MSCI Emerging Markets 100 UCITS ETF 1C (EEM) - Market Share: 6.5%

Expense Ratio:

SCHE has an expense ratio of 0.12%.

Investment Approach and Strategy:

• Strategy: SCHE tracks the FTSE Emerging Index, aiming to replicate its performance.
• Composition: The ETF primarily holds shares of large-cap companies in sectors like financials, technology, and consumer discretionary.

Key Points:

• Low-cost exposure to a diversified basket of emerging market large-cap stocks.
• Focus on fundamental strength and ESG compliance.
• Competitive performance against the benchmark.
• Good liquidity and low trading costs.

Risks:

• Emerging market volatility: Emerging markets are generally considered riskier than developed markets, leading to potential price fluctuations.
• Currency risk: Fluctuations in emerging market currencies can impact returns.
• Geopolitical risks: Political instability or conflicts in emerging markets can negatively affect the ETF's performance.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with exposure to emerging market equities.
• Investors looking for a low-cost and diversified option within the emerging markets category.
• Investors with a tolerance for higher volatility and a long-term investment horizon.

Fundamental Rating Based on AI:

8.7/10

Based on the analysis of various factors, including financial health, market position, and future prospects, AI assigns a rating of 8.7 out of 10 to ETF Schwab Fundamental Emerging Markets Large Company Index ETF. This indicates a strong overall score with positive long-term potential.