Investing

Schwab Fundamental U.S. Large Company ETF (FNDX) Is a Buy Right Now

Chris MacDonald

Published: November 6, 2024 11:28 am

The Schwab Fundamental U.S. Large Company ETF (FNDX) is an exchange-traded fund designed to track the performance of large-cap U.S. companies based on fundamental metrics such as sales, cash flow, and dividends/buybacks. Launched on August 15, 2013, FNDX utilizes a unique selection and weighting methodology that diverges from traditional market capitalization approaches, aiming to invest in companies that exhibit strong financial health and growth potential. 

As of the fund’s most recent data, FNDX has approximately $17.45 billion in assets under management and a low expense ratio of 0.25%, making it an attractive option for cost-conscious investors. FNDX’s portfolio is diversified across various sectors, with significant holdings in technology, financials, and healthcare. Notable top holdings include major corporations like Apple, Microsoft, and Berkshire Hathaway, among others.

The ETF has demonstrated solid performance, with a year-to-date return of more than 18% and positive momentum. Let’s dive into the bull case behind why this specific exchange traded fund may be a buy right now. 

Key Points About This Article:

• The Schwab U.S. Large Company ETF (FNDX) certainly looks like a compelling pick for investors looking for stable growth in large-cap stocks.
• Here’s why this particular ETF looks like a solid way for investors to gain exposure to the market right now.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Let’s Look At the Fundamentals

The Schwab Fundamental U.S. Large Company ETF (FNDX) is a top ETF providing broad exposure to the large cap value sector. This particular ETF offers broad diversification to more than 700 companies in this space, and does so at a very reasonable 0.25% expense ratio.

With more than $16 billion in assets, FNDX is a recognized ETF for investors looking to enhance their risk-adjusted long-term returns investing in a lower-cost diversified fund. This would be among my top picks in this space for those looking to do so, with the ETF providing significant exposure to top tech and industrial companies across the U.S. For those looking to bet on the future of the American economy, this is a top option in the large-cap space worth considering, providing solid returns of more than 25% over the past year.

Now, there are other funds in the large-cap space that have provided better returns over time, and these ETFs are going to vary over differing time periods. But in my view, FNDX is well-positioned to continue to ride capital inflows into equity markets, providing passive investors with an effective vehicle to generate meaningful capital appreciation over time.

Why FNDX Looks Like a Buy

The Schwab Fundamental US Large Company ETF offers broad large-cap exposure by weighting stocks based on fundamentals like sales and cash flow. This ETF undertakes a rebalancing strategy that aims to “buy low, sell high” – that’s what all investors are after. Thus, while this fund is passive in nature, its investing criteria makes it such that investors are getting active-like exposure. And given the fund’s rather low MER of just 25 basis points, I think such rebalancing activity (and a higher relative expense ratio compared to index funds) is worth it. 

Having a fund that employs a contrarian investment strategy and focuses on undervalued stocks is a place I think many investors want to be. This is an ETF that allows investors to participate in the upside undervalued stocks can provide in markets where capital rotates away from companies with unsustainable valuations toward those with fundamentals that make sense. That’s the sort of market I think we’re heading toward in the years ahead.

Of course, the market can continue to stay irrational longer than some investors can stay solvent. That’s a saying for a reason. But for those looking for relative value in a world of stocks that seem to be perpetually overvalued, this is a great ETF to consider right now.