FNDX is overweight technology stocks relative to the Russell 1000 because share buybacks factor in the ETF’s weighting methodology and the tech sector is home to some the largest share repurchasers. FNDX tracks the Russell Fundamental U.S. Large Company Index.
“Over the long run, betting on value has paid off in nearly every market studied. Investors may extrapolate recent growth too far into the future, which can push prices away from fair value. This fund counters that bias by anchoring its weights in each company’s proven capacity to create value. This approach has worked we ll so far. Over the trailing five years through March 2014, the fund outpaced the Russell 1000 Index by 3.9% annualized, while the large-blend category average lagged that benchmark,” according to Morningstar.
FNDX charges 0.32% per year, which is low among fundamentally weighted ETFs. Additionally, portfolio turnover of just 6% helps keep costs low and Schwab clients gain even more savings because FNDX, like all Schwab ETFs, are available on a commission-free basis. [Schwab Adds ETFs to Commission-Free Lineup]
Schwab Fundamental U.S. Large Company Index ETF
ETF Trends editorial team contributed to this article.