Launched on 08/13/2013, the Schwab Fundamental U.S. Broad Market ETF (FNDB) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Charles Schwab. It has amassed assets over $1.38 billion, making it one of the largest ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Russell RAFI US Index.
The RAFI Fundamental High Liquidity US All Index measures the performance of U.S. based companies based on their fundamental size and weight.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.25%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.44%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FNDB, it has heaviest allocation in the Information Technology sector --about 21.2% of the portfolio --while Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL) accounts for about 3.89% of the fund's total assets, followed by Exxon Mobil Corp (XOM) and Microsoft Corp (MSFT).
Performance and Risk
Year-to-date, the Schwab Fundamental U.S. Broad Market ETF has added about 14.88% so far, and was up about 31.64% over the last 12 months (as of 06/23/2026). FNDB has traded between $23.59 $30.73 in this past 52-week period.
FNDB has a beta of 0.88 and standard deviation of 13.09% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1655 holdings, it effectively diversifies company-specific risk .
Alternatives
Schwab Fundamental U.S. Broad Market ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Fidelity High Dividend ETF (FDVV) tracks Fidelity Core Dividend Index and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Fidelity High Dividend ETF has $9.62 billion in assets, iShares Core S&P U.S. Value ETF has $26.2 billion. FDVV has an expense ratio of 0.15% and IUSV changes 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value
Bottom Line
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Schwab Fundamental U.S. Broad Market ETF (FNDB): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).