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.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Charles Schwab. It has amassed assets over $8.96 billion, making it one of the largest ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the Russell RAFI Emerging Markets Large Co. Index (Net) before fees and expenses.

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.

Cost & Other Expenses

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.

The fund has a 12-month trailing dividend yield of 3.93%.

Sector Exposure and Top Holdings

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.

When you look at individual holdings, Taiwan Semiconductor Manufacturingaccounts for about 5.4% of the fund's total assets, followed by Alibaba Group Holding Ltd and Vale Sa (VALE3).

Performance and Risk

The ETF has added roughly 6.52% so far this year and is up about 27.86% in the last one year (as of 03/10/2026). In the past 52-week period, it has traded between $26.66 and $40.88

FNDE has a beta of 0.54 and standard deviation of 15.93% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 393 holdings, it effectively diversifies company-specific risk .

Alternatives

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 Emerging Markets Stock Index Fund ETF Shares (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 Emerging Markets Stock Index Fund ETF Shares has $112.09 billion in assets, iShares Core MSCI Emerging Markets ETF has $139.69 billion. VWO has an expense ratio of 0.06% 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

Bottom Line

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

This article originally published on Zacks Investment Research (zacks.com).

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