Should Schwab Fundamental U.S. Small Company ETF (FNDA) Be on Your Investing Radar?

Core Viewpoint - The Schwab Fundamental U.S. Small Company ETF (FNDA) provides broad exposure to the Small Cap Value segment of the US equity market, with significant assets under management and a focus on cost efficiency [1][4]. Group 1: Fund Overview - FNDA is a passively managed ETF launched on August 13, 2013, and is sponsored by Charles Schwab, with assets exceeding $8.67 billion [1]. - The ETF targets small cap companies with market capitalizations below $2 billion, which are considered high-potential but come with higher risks compared to larger counterparts [2]. Group 2: Investment Characteristics - Value stocks, which FNDA focuses on, typically have lower price-to-earnings and price-to-book ratios, but also exhibit lower sales and earnings growth rates [3]. - Historically, value stocks have outperformed growth stocks in most markets, although growth stocks tend to perform better in strong bull markets [3]. Group 3: Cost Structure - FNDA has an annual operating expense ratio of 0.25%, positioning it as one of the more cost-effective options in the ETF space [4]. - The ETF offers a 12-month trailing dividend yield of 1.31% [4]. Group 4: Sector Exposure and Holdings - The ETF has a significant allocation to the Industrials sector, comprising approximately 20.6% of the portfolio, followed by Financials and Consumer Discretionary [5]. - Woodward Inc (WWD) is the largest individual holding at about 0.34% of total assets, with the top 10 holdings accounting for roughly 3.03% of total assets under management [6]. Group 5: Performance Metrics - FNDA aims to match the performance of the Russell RAFI US Small Co. Index, with a year-to-date return of approximately 2.44% and a one-year return of about 6.38% as of August 20, 2025 [7]. - The ETF has traded between $23.85 and $32.42 over the past 52 weeks [7]. Group 6: Risk Profile - FNDA has a beta of 1.10 and a standard deviation of 20.93% over the trailing three-year period, indicating a medium risk profile [8]. - The ETF consists of about 986 holdings, which helps to diversify company-specific risk [8]. Group 7: Alternatives - FNDA holds a Zacks ETF Rank of 2 (Buy), indicating favorable expected returns based on various factors [9]. - Other comparable ETFs include the iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR), with IWN having $11.31 billion in assets and VBR at $30.67 billion [10]. Group 8: Market Trends - There is a growing trend among retail and institutional investors towards passively managed ETFs due to their low costs, transparency, flexibility, and tax efficiency, making them suitable for long-term investment strategies [11].