Schwab Fundamental International Small Company Index ETF (FNDC)

Overview

The Schwab Fundamental International Small Company Index ETF (FNDC) seeks to track the RAFI Fundamental Developed ex-U.S. Small Company Index, focusing on small-cap companies in developed countries outside the U.S. The fund uses a fundamental weighting strategy based on factors like sales, cash flow, book value and dividends, rather than market capitalization.

Reputation and Reliability

Schwab is a well-established and reputable financial services firm with a long track record of providing investment products.

Management Expertise

Schwab has a strong management team with extensive experience in ETF management and investment strategies.

Goal

To track the total return of the RAFI Fundamental Developed ex-U.S. Small Company Index.

Investment Approach and Strategy

Strategy: The ETF tracks a fundamental index that weights securities based on fundamental factors, offering a different approach from market-cap weighted indexes.

Composition The ETF holds stocks of small-cap companies located in developed countries outside the United States.

Market Share: FNDC has a moderate market share within the international small-cap ETF space.

Total Net Assets (AUM): 656850000

Key Competitors

• VSS
• GWX
• SCZ

Competitive Landscape

The international small-cap ETF market is competitive, with several established players. FNDC distinguishes itself through its fundamental weighting approach, which may lead to different performance outcomes compared to market-cap weighted competitors. A disadvantage could be less diversification compared to market-cap weighted indexes.

Historical Performance: Historical performance data is readily available from Schwab and other financial data providers. Data should be represented as a series of returns (e.g., [0.10, 0.12, -0.05, 0.15, 0.08] for 10%, 12%, -5%, 15%, 8% returns over 5 years).

Benchmark Comparison: Compare against the RAFI Fundamental Developed ex-U.S. Small Company Index. Data should be returned in a similar format to Historical Performance.

Expense Ratio: 0.25

Average Trading Volume

The ETF exhibits moderate liquidity, with average trading volumes facilitating ease of buying and selling.

Bid-Ask Spread

The bid-ask spread is typically relatively tight, suggesting cost-effective trading conditions.

Market Environment Factors

Economic growth in developed ex-U.S. markets, interest rate policies, and currency fluctuations influence the ETF's performance.

Growth Trajectory

Growth depends on global economic conditions and investor appetite for international small-cap equities. Any changes to the underlying index methodology or holdings would impact the trajectory.

Competitive Edge

FNDC's fundamental weighting strategy provides a competitive edge by potentially capturing undervalued companies. This approach aims to improve risk-adjusted returns by focusing on companies with strong fundamentals like sales, cash flow, book value and dividends. The ETFu2019s low expense ratio compared to other fundamentally weighted ETFs gives it an additional advantage. However, the fund's success depends on the effectiveness of the RAFI fundamental index.

Volatility

Volatility is typical of small-cap international equities. It reflects the potential for large price swings.

Market Risk

Exposure to international markets introduces currency risk and political risk in addition to the usual market risks associated with equity investments.

Ideal Investor Profile

Investors seeking diversified exposure to international small-cap equities, potentially looking for value-oriented strategy, are ideal for this ETF.

Market Risk

This ETF is more suitable for long-term investors seeking capital appreciation and diversification in their portfolio.

The Schwab Fundamental International Small Company Index ETF offers exposure to small-cap international equities through a fundamentally weighted approach. Its low expense ratio and reputable issuer make it an attractive option for investors seeking diversified international equity exposure. However, potential investors should be aware of the risks associated with small-cap and international investing. The fund's fundamental weighting strategy may perform differently than market-cap weighted indexes depending on market conditions and stock selections.

Data Sources:

• Schwab Asset Management
• Morningstar
• ETF.com

Disclaimers:

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