The Schwab Fundamental U.S. Large Company ETF (FNDX) made its debut on 08/13/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large 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.

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.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Charles Schwab. FNDX has been able to amass assets over $26.99 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, FNDX seeks to match the performance of the Russell RAFI US Large Co. Index.

The RAFI Fundamental High Liquidity US Large Index measures the performance of large U.S. 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.

Operating expenses on an annual basis are 0.25% for FNDX, making it one of the cheaper products in the space.

The fund has a 12-month trailing dividend yield of 1.44%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

FNDX's heaviest allocation is in the Information Technology sector, which is about 18.1% of the portfolio. Its Financials and Healthcare round out the top three.

Taking into account individual holdings, Apple Inc (AAPL) accounts for about 4.5% of the fund's total assets, followed by Microsoft Corp (MSFT) and Exxonmobil Holdings Corp (XOM).

FNDX's top 10 holdings account for about 20.93% of its total assets under management.

Performance and Risk

Year-to-date, the Schwab Fundamental U.S. Large Company ETF has added about 18.41% so far, and was up about 33.1% over the last 12 months (as of 08/04/2026). FNDX has traded between $24.62 $31.99 in this past 52-week period.

FNDX has a beta of 0.87 and standard deviation of 12.85% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 739 holdings, it effectively diversifies company-specific risk .

Alternatives

Schwab Fundamental U.S. Large Company ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value Index Fund ETF Shares (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $104.14 billion in assets, Vanguard Value Index Fund ETF Shares has $188.51 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.

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 - Large Cap Value

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

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Schwab Fundamental U.S. Large Company ETF (FNDX): ETF Research Reports

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

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