FNDE charges 0.4% per year, or $40 on a $10,000 investment. While many cap-weighted emerging markets ETFs are less expensive than that, FNDE is cost-friendly relative to competing smart beta emerging markets strategies. Plus, Schwab clients can trade the fund commission-free.
Related: Factor Investing: What is the Right Number of Factors?
“Emerging market investors concentrate their assets in a few ETFs because investors shy away from factors when analyzing emerging markets and because low trading volume keeps investors in familiar names. These two causes have a chicken-or-egg quality about them. If more investors focused on smart beta factors, then volume would be higher. If volume rose, more investors would use emerging market smart beta ETFs,” according to CLS Investments research.
While investors have shown a preference for the prosaic with emerging markets ETFs, FNDE is undoubtedly successful as highlighted by its $1.3 billion in assets under management. The ETF turns four in August.
For more on smart beta ETFs, visit our Smart Beta Channel.