2 days ago
Is Schwab Fundamental Emerging Markets Equity ETF (FNDE) a Strong ETF Right Now?
The Schwab Fundamental Emerging Markets Equity ETF (FNDE) was launched on 08/13/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Emerging Market ETFs category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Managed by Charles Schwab, FNDE has amassed assets over $7.07 billion, making it one of the largest ETFs in the Broad Emerging Market ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net).
The RAFI Fundamental High Liquidity Emerging Markets Index measures the performance of large sized companies, based on their fundamental size and weight, in emerging market countries.
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for FNDE are 0.39%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.16%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturingaccounts for about 4.32% of the fund's total assets, followed by Alibaba Group Holding Ltd and China Construction Bank Corp H.
FNDE's top 10 holdings account for about 25.47% of its total assets under management.
Year-to-date, the Schwab Fundamental Emerging Markets Equity ETF return is roughly 14.77% so far, and was up about 16.55% over the last 12 months (as of 07/02/2025). FNDE has traded between $26.66 and $33.95 in this past 52-week period.
The ETF has a beta of 0.60 and standard deviation of 16.90% for the trailing three-year period, making it a medium risk choice in the space. With about 408 holdings, it effectively diversifies company-specific risk .
Schwab Fundamental Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $90.08 billion in assets, iShares Core MSCI Emerging Markets ETF has $95.8 billion. VWO has an expense ratio of 0.07% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
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 Emerging Markets Equity ETF (FNDE): ETF Research Reports
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