FNDB: A Strategic Buy for 2026 as Value Investing Gains Momentum

The investment landscape in 2026 is poised for a significant shift as market participants increasingly pivot from the dominance of growth stocks-particularly the "Magnificent Seven" tech giants-to value-oriented strategies. This rotation is driven by a confluence of macroeconomic factors, including concerns over overvaluation in AI-driven sectors, the Federal Reserve's anticipated rate-cutting cycle, and a broader search for diversification. Amid this backdrop, the Schwab Fundamental U.S. Broad Market ETF (FNDB) emerges as a compelling candidate for investors seeking exposure to value stocks while navigating the complexities of market rotation.

The Case for Value Investing in 2026

The tug-of-war between growth and value stocks has intensified in 2025/2026, with value stocks gaining temporary traction amid investor unease over concentrated AI narratives and elevated valuations in the tech sector. According to RBC Capital Markets, the Russell 1000 Value Index surged 13% in 2025, signaling a potential reawakening of value investing as a counterbalance to speculative momentum plays. This trend is further supported by J.P. Morgan Global Research, which highlights the polarization between AI-driven sectors and non-AI sectors, urging investors to diversify beyond concentrated growth narratives.

The Federal Reserve's expected rate cuts in 2026 also tilt the scales in favor of value stocks. As cash yields decline, investors are likely to reallocate capital toward equities with stronger fundamentals and lower valuations. BlackRock's 2026 outlook underscores this dynamic, noting that the "other 493" S&P 500 companies are delivering robust earnings growth for the first time since 2022, suggesting a broadening of market leadership.

FNDB's Strategic Positioning

FNDB, a smart beta ETF with a value tilt, is uniquely positioned to capitalize on these trends. The ETF tracks the Russell RAFI US Index, emphasizing liquidity and fundamental metrics such as revenue, dividends, and book value according to stock analysis. Its sector allocation reflects a balanced approach, with Financials representing 17.90–19.50% of holdings, followed by Information Technology and Healthcare as reported by Nasdaq. This diversification mitigates overexposure to any single sector while aligning with the broader market's shift toward value.

Performance data further strengthens FNDB's case. With a 3-year annualized return of 15.20% and a beta of 0.94–1.01, the ETF demonstrates resilience and moderate risk as noted by stock analysis. Its top holdings-Apple, Microsoft, and Berkshire Hathaway-combine growth and value characteristics, offering a hybrid profile that appeals to investors seeking both stability and growth potential.

Alignment with 2026 Market Rotation Trends

FNDB's value-oriented strategy aligns with key 2026 investment themes. As global equity valuations remain stretched, particularly in the U.S., investors are increasingly prioritizing attractively priced stocks with strong balance sheets. PIMCO's 2026 outlook emphasizes the need to "stick to quality plus value," a philosophy that FNDB embodies through its focus on fundamentals.

Moreover, the ETF's exposure to international diversification-though primarily U.S.-focused-resonates with the broader trend of rebalancing portfolios away from overconcentrated tech exposure. For instance, emerging markets like Korea and Taiwan offer technology exposure at lower valuations, a strategy that complements FNDB's domestic value tilt as highlighted by Forbes. This dual approach-leveraging U.S. value stocks while hedging against global market fragmentation-positions FNDB as a versatile tool for 2026.

Expert Endorsements and Active Management

While explicit endorsements for FNDB are sparse, broader expert analyses highlight its strategic relevance. Active ETFs with value tilts are increasingly recommended for their flexibility in navigating shifting monetary policies and sector rotations. FNDB's structure allows it to adapt to these dynamics without the complexity of active management, making it an accessible option for investors seeking a middle ground between passive and active strategies.

Additionally, the ETF's low expense ratio (0.25%) enhances its appeal in a landscape where liquidity and cost efficiency are critical. As BlackRock notes, investors are prioritizing "core-satellite" portfolio designs, with broadly diversified ETFs forming the core. FNDB's broad market exposure and value tilt make it an ideal core holding, while its sector diversification allows for satellite allocations to high-growth themes like AI infrastructure or renewable energy.

Conclusion

FNDB represents a strategic buy for 2026 as value investing gains momentum. Its alignment with macroeconomic trends, balanced sector exposure, and performance resilience position it as a robust vehicle for investors navigating the growth-versus-value tug-of-war. While the path to value dominance is not guaranteed, the confluence of rate cuts, earnings broadening, and structural shifts in global markets creates a favorable environment for FNDB to thrive. As the year unfolds, investors would be well-advised to consider FNDB as a cornerstone of their 2026 portfolios.