Schwab Fundamental U.S. Small Company Index ETF (FNDA)

Overview

The Schwab Fundamental U.S. Small Company Index ETF (FNDA) seeks to track the Russell RAFI US Small Company Index, which measures the performance of small-cap U.S. companies, selected and weighted based on fundamental measures such as sales, cash flow, and book value.

Reputation and Reliability

Charles Schwab is a well-established and reputable financial services company with a long track record in the investment management industry.

Management Expertise

Schwab has extensive experience and expertise in managing index-based ETFs, with a team of professionals dedicated to managing and overseeing their ETF offerings.

Goal

To track the total return of the Russell RAFI US Small Company Index.

Investment Approach and Strategy

Strategy: The ETF aims to track a specific index (Russell RAFI US Small Company Index) by investing in the index's constituent securities in proportion to their index weights.

Composition The ETF primarily holds stocks of small-cap U.S. companies selected and weighted based on fundamental factors like sales, cash flow, and book value.

Market Share: FNDAu2019s market share within the fundamental small cap ETFs is notable, although the broader small-cap ETF market is diverse.

Total Net Assets (AUM): 8940000000

Key Competitors

• IJR
• VBR
• VB

Competitive Landscape

The small-cap ETF industry is competitive, with many ETFs tracking different indices or using different weighting methodologies. FNDA differentiates itself through its fundamental indexing approach, which may provide better risk-adjusted returns compared to traditional market-cap weighted ETFs. However, it can underperform during periods when market-cap weighted indices are favored.

Historical Performance: Historical performance data should be reviewed to assess returns over various periods (e.g., 1-year, 3-year, 5-year, 10-year) but it does not predict the future.

Benchmark Comparison: The ETF's performance should be compared against the Russell RAFI US Small Company Index to evaluate how closely it tracks its benchmark.

Expense Ratio: 0.0025

Average Trading Volume

FNDA exhibits moderate liquidity, indicated by an average daily trading volume that facilitates efficient trading for most investors.

Bid-Ask Spread

FNDA typically has a relatively tight bid-ask spread, reflecting its liquidity and ease of trading.

Market Environment Factors

Economic growth, interest rate movements, and investor sentiment towards small-cap stocks can all affect FNDA. Sector allocation also influences the performance of FNDA.

Growth Trajectory

Growth trajectory is tied to small-cap U.S. market performance and any changes to index composition or investment strategy. The fundamental weighting approach might lead to different sector exposures over time.

Competitive Edge

FNDA's competitive advantage lies in its fundamental indexing methodology, which selects and weights stocks based on fundamental factors. This approach can potentially lead to better risk-adjusted returns compared to market-cap weighted indices. Its low expense ratio also contributes to its appeal. The use of fundamental factors could potentially avoid overvalued companies. Schwab's brand recognition and distribution network also provide an advantage.

Volatility

FNDA's volatility will reflect that of the small-cap market, which tends to be more volatile than large-cap stocks.

Market Risk

FNDA is subject to market risk, particularly risks associated with small-cap stocks, such as lower liquidity and greater sensitivity to economic fluctuations.

Ideal Investor Profile

The ideal investor for FNDA is someone seeking exposure to U.S. small-cap stocks with a preference for a fundamentally weighted approach.

Market Risk

FNDA is suitable for long-term investors seeking diversification and potential outperformance from small-cap stocks. It may also appeal to passive index followers who prefer fundamental indexing over market-cap weighting.

The Schwab Fundamental U.S. Small Company Index ETF (FNDA) offers exposure to small-cap U.S. equities through a fundamental indexing approach, aiming for potentially better risk-adjusted returns. The ETF has a low expense ratio. However, investors should be aware of the volatility associated with small-cap stocks. FNDA is suitable for long-term investors seeking diversified exposure to the small-cap segment with a fundamentally driven strategy, and prefer the Schwab's approach and fees.

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 made based on individual circumstances and consultation with a financial professional. Market share estimates can fluctuate.