Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE)

Overview

The Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) seeks to track the investment results of the Russell RAFI Emerging Markets Large Company Index, which measures the performance of large-cap companies in emerging markets selected based on fundamental factors such as adjusted sales, cash flow, and dividends plus buybacks. It aims to provide exposure to emerging market equities with a value tilt.

Reputation and Reliability

Schwab is a well-established and reputable financial services company known for its low-cost ETFs and broad investment offerings.

Management Expertise

Schwab has extensive experience in managing ETFs and index funds, with a dedicated team of investment professionals overseeing the portfolio.

Goal

To track the investment results of the Russell RAFI Emerging Markets Large Company Index.

Investment Approach and Strategy

Strategy: The ETF employs a passive management strategy, attempting to replicate the performance of the Russell RAFI Emerging Markets Large Company Index.

Composition The ETF primarily holds stocks of large-cap companies in emerging markets, selected and weighted based on fundamental measures of company size rather than market capitalization.

Market Share: FNDE's market share is moderate within the emerging market large-cap ETF segment.

Total Net Assets (AUM): 609300000

Key Competitors

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• iShares MSCI Emerging Markets ETF (EEM)

Competitive Landscape

The emerging markets ETF landscape is dominated by a few large players like Vanguard and iShares. FNDE's fundamental weighting approach offers a differentiator, potentially leading to different performance outcomes compared to market-cap-weighted competitors. Its advantage lies in a value tilt, but it may underperform during growth-driven market rallies. Smaller AUM compared to competitors.

Historical Performance: Historical performance varies depending on the time period, influenced by emerging market conditions and the effectiveness of the fundamental weighting strategy.

Benchmark Comparison: The ETF's performance is compared to the Russell RAFI Emerging Markets Large Company Index to assess tracking accuracy.

Expense Ratio: 0.39

Average Trading Volume

The average trading volume is moderate, which is generally sufficient for most investors but lower compared to the biggest ETFs in this space.

Bid-Ask Spread

The bid-ask spread is typically competitive, reflecting the fund's liquidity and trading activity.

Market Environment Factors

Economic growth in emerging markets, currency fluctuations, geopolitical risks, and commodity prices significantly influence FNDE's performance.

Growth Trajectory

Growth trends are tied to the overall health and development of emerging market economies, with adjustments to holdings based on the underlying index methodology.

Competitive Edge

FNDE's competitive edge lies in its fundamental indexing approach, which selects and weights companies based on fundamental factors rather than market capitalization, potentially offering a value-oriented and risk-adjusted approach. This strategy may lead to outperformance in certain market conditions by reducing exposure to overvalued companies. However, it may also lead to underperformance during periods of growth stock dominance. The lower market share compared to market cap weighted ETFs is a disadvantage.

Volatility

The ETF experiences volatility consistent with emerging market equities, which tends to be higher than developed market equities.

Market Risk

Market risks include economic slowdowns in emerging markets, currency devaluation, political instability, and regulatory changes, all of which can negatively affect FNDE's investments.

Ideal Investor Profile

The ideal investor is seeking exposure to emerging market equities with a value tilt, willing to accept higher volatility, and comfortable with a fundamental indexing strategy.

Market Risk

The ETF is suitable for long-term investors seeking diversification and potential growth from emerging markets, with a higher risk tolerance.

Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE) provides exposure to large-cap emerging market companies selected based on fundamental factors. The ETF's fundamental weighting strategy may offer a value tilt compared to traditional market-cap-weighted ETFs and track the investment results of the Russell RAFI Emerging Markets Large Company Index. Its performance is subject to the volatility inherent in emerging markets. It is best suited for long-term investors seeking diversification with a higher risk tolerance.

Data Sources:

• Schwab Asset Management
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. Market share data may vary slightly depending on the source and date.