Moving away from traditional beta indexing methodologies, Charles Schwab is planning to utilize “intelligent-” or “smart-“beta indices for its next set of so-called fundamental exchange traded funds.
According to a recent Securities and Exchange Commission filing, the fund sponsor is working on six new ETFs:
- Schwab Fundamental U.S. All Company ETF (FNDB) will try to reflect the performance of the Russell Fundamental U.S. Index, which includes components from the Russell 3000 Index.
- Schwab Fundamental U.S. Large Company ETF (FNDX) will try to reflect the performance of the Russell Fundamental U.S. Large Company Index, which includes the top companies that weight above 87.5% from the Russell 3000 Index.
- Schwab Fundamental U.S. Small Company ETF (FNDA) will try to reflect the performance of the Russell Fundamental U.S. Small Company Index, which includes the bottom companies that weight below 87.5% from the Russell 3000 Index.
- Schwab Fundamental International Large Company ETF (FNDF) will try to reflect the performance of the Russell Fundamental Developed ex-U.S. Large Company Index, which includes companies with weights above 87.5% of the Russell Developed ex-U.S. Index.
- Schwab Fundamental International Small Company ETF (FNDC) will try to reflect the performance of theRussell Fundamental Developed ex-U.S. Small Company Index, which includes companies with weights below 87.5% of the Russell Developed ex-U.S. Index.
- Schwab Fundamental Emerging Markets Large Company ETF (FNDE) will try to reflect the performance of the Russell Fundamental Emerging Markets Large Company Index, which includes companies with weights above 87.5% of the Russell Emerging Markets Index.
The six funds’ fundamental indexing methodology weights holdings by company sized based on adjusted sales, operating cash flow, and dividends plus buyback.
The group of “enhanced,” “intelligent” or “smart” index ETFs is growing within the industry, with almost 300 such products on the market, according to XTF.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.