FNDB
Schwab Fundamental U.S. Broad Market Index ETF
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I'm not very impressed by FNDB's movement since inception for its 0.25% expense ratio. A lot of FNDB's holdings are too similar to the S&P500 so FNDB moves like SWPPX and SPYM with a 0.02% expense but FNDB is more expensive and historically performs worse. VTV is a more affordable value etf with 0.03% expense. It has historically underperformed FNDB but with the lower expense and lower drawdowns VTV better justifies its function in a portfolio as a hedge. Better hedges for US large caps than FNDB and VTV are AVUV for US small cap value, VYMI for international, and SGOV for US treasuries (dry powder). There are other options not listed. A hedge should ideally offer something the threatened core does not have and that can be either tilting a portfolio toward unique defensive holdings or offering a certain liquidity that can be used at an opportune time. SCHD fills a hedge role by tilting toward fewer tech holdings that will crash at a different time from a tech crash and its dividends can be used to buy into a market correction without selling shares. Dividend etfs are not intended to be invincible and dividends are a strength during bear markets. The number of holdings in an etf whether they are 100 or 1,000 do not really matter so long as it is weighted appropriately in a portfolio. Sites like etfdb or other tools can help analyze your portfolio's holdings so you can spot if you've accidentally made something like NVDA 20% weight or something reckless. https://etfdb.com/tool/portfolio-analyzer/?etfs%5Bspym%5D=50&etfs%5Bvymi%5D=50
A guy over at /r/bogleheads pointed me to FNDB and somehow survived, because those fuckers are dangerously dogmatic. I think that one is great. Less allocation to top stocks, better sector allocation, but still has the sensible tech companies but no Tesla or Palantir or other crazies. Plus higher dividend than SPY. Good history too, and recent performance is great. If it were me, I would use that instead of an S&P500 stock, and add in a good dividend ETF. SCHD is doing well again after they did some changes and as more people rotate out of the crazy and look for value, but there are many good dividend ETFs. International ETFs are important too. They lean more value and have higher dividends, and are out performing the 500 in total return lately. Something like SCHF is great.
Take a few days or weeks off. It's OK. I'd get back in with some ETFs that don't go heavily into Tech, like FNDX or FNDB... they don't use market cap weighted indices. Get a generous slice of international... VXUS. High quality bonds. Cash. Gold. Commodities (PDBC). Relax.
Can weigth by RAFI fundementals, see PRF (large caps) or FNDB (large/mid/small). TSLA/PLTR end up being weighted to nothing cause they suck. APPL/GOOG/META are still at top cause they're solid companies, though not nearly as high as in VOO. I mean no way tech sector undergoes a major correction without entire market going along with it, heh. Highly likely VTI beats out whatever fancy stuff you try.
FNDB and FNDX are weighted by fundamentals (sales, profits, dividends, etc.) rather than market cap. Top holdings are still AAPL and MSFT but tech overall I think is 19% in FNDB vs 30-40% in VOO. 90% of my Roth is in VT and FNDB.
Take a look at some of the "RAFI" type funds - just a different way to define the parameters on an "index" Funds like VLU, FNDB, FNDF have more of a value aspect - might be a good place to invest if your worried about how rich the S&P500 is. I have $ in all 3 of those and sleep well at night.
the S&P 500 is far from perfect. and it's been mythologized by some as the perfect ultimate investment, when that's far from accurate. there are long periods of time smaller US companies like the S&P 600 will beat the S&P 500, international stocks, bonds, or commodities will give much better returns. Rob Arnott and colleagues wrote a paper on how index funds tend to basically sell low and buy high when they make changes. https://www.researchaffiliates.com/publications/articles/674-buy-high-and-sell-low-with-index-funds but the point is not that the S&P 500 is perfect, but that (a) it's rarely a terrible choice long-term and is a decent proxy for the overall market; and (b) the transaction/expense costs are low in most cases with a mutual fund or ETF tracking the S&P 500. fees are one of the few variables individual investors can control. if you compare S&P 500 performance with with the Russell 1000, which is based entirely on market capitalization, the long-term results are very close. https://media.ycharts.com/charts/b8cb8a529298112db88f111952bd986e.png I can't find the links at the moment, but there's data showing any large pool of stocks (30-50+) selected at random from the Russell 1000 or Russell 3000 will tend to perform about as well as the overall market, when looking at the long-term. there are 'fundamental indexes' that rank stocks by earnings, revenue, dividends, etc. Schwab has a bunch (FNDX, FNDB, FNDE) and Wisdom Tree has ESP and similar.
SCHY. Largely because I’d already have FNDB or SCHB (strongly favoring the former). I like the fundamentals on all three. As an aside, I don’t like SCHD’s new emphasis on utilities for some reason but that’s just on personal preference that could change
There are lots of them - for example FNDB (Schwab Fundamental US Broad Market) and IVB (iShares Core S&P US Value ETF). Search for US fundamental ETF to find more.
I'm a big fan of these ETFs, and have several in IRAs for me and my wife. They do lean towards value stocks, but there's more to it. The idea, developed by Rob Arnott of Research Affiliates, was to find a method that tracks the overall economic footprint of companies rather than just measure the stock price like traditional index funds. Arnott and Jeremy Siegel came up with similar concepts during the late 1990s dot-com bubble. WisdomTree uses Siegel's ideas but the Schwab ETFs have much more AUM and liquidity. The fundamental indexes rank stocks by things like book value, dividends and buybacks, and cashflow. These ETFs will lag a bit during bull markets, but they hold up much better during bear markets because they don't get concentrated in trendy stocks that are getting detached from underling financials for the companies. e.g., the US market crashed 18-19% in 2022, but FNDB was down only 7%. Arnott also addresses something I've never heard anyone else mention with fund/ETF composition: who's on the other side of the trade? The fundamental ETFs are designed to contra-trade against prevailing market sentiment, trimming holdings that are trendy or richly valued and adding holdings that are not popular and probably undervalued.
SCHD & FNDB look like excellent funds. I can do about $8K per year in long-term gains without interfering with my expansion Medicaid subscription - and I could do a "one off" gain of any amount, but I want to limit this to no more than once every 2 years, so that it doesn't look "recurring".
I think you'd be better off just buying a strategy that naturally tilts more towards this direction. Also if in taxable, you would avoid the tax-hit to rebalance. A Fundamentally Weighted index like FNDB would be one such example that will avoid the tech overweight. Something like AVUS will also get you within this 25% cap right now (this would be my preference). If you want even more tilt to value, could use AVLV but AVUS is a well designed fund with less tracking error. Both of these options hold all the large-cap names but just adjust weights, so you aren't excluding anything outright, just over/under-weighting at the sector AND stock level.
If you want a small and value tilt: FNDA, FNDB, FNDC, FNDD, FNDE, FNDF equal as a core. Non-taxable add SFREX (not available as an ETF). If you want a bit less value: long term investment: 13.33% in each of FNDA, FNDB,FNDC, FNDE, FNDF, VTI, VXUS. Rest (6.66%) VWO
Three types of funds that would pair well with an SP500 fund would include 1) International. There have been long periods where international has beaten the US. If you don’t like international that’s okay too I guess. 2) Small cap. Historically small cap stocks have outgrown large cap stocks. Look at the ibbotsen chart. Some people who have attached their personality to the SP500 will downvote this but they are wrong. Small cap blend funds would include: IJR, VB, IWM, VXF. Small cap value funds would include: IJS, CALF, AVUV, VBR. 3) Value. The SP500 rides the line between large cap blend and large cap growth. Now, just any value fund won’t do. Check out DFAC from Dimensional. They use a factor based model to over/underweight different stocks. Another option would be FNDB which uses a slightly different set of factors but will generally achieve a similar result.
If I couldn't touch it I'd prefer actively managed global funds. But if we are talking ETFs well I did this exercise recently for someone (this is probably simpler than I would do for myself but): 13.33% in each of FNDA, FNDB,FNDC, FNDE, FNDF, VTI, VXUS. Rest (6.66%) VWO
There is no advantage of QQQ or VUG. You already are heavy USA large cap growth with VOO and VTI. In terms of what you are missing: small, value, international (Schwab funds: FNDA, FNDB, FNDC, FNDE, FNDF would fill most gaps). In terms of hands off consider M1 as a broker.
You are not diversified but NVDA is just an example not really the core of the problem. SPY is USA large cap with a growth tilt. QQQ is USA large cap with a technology tilt. SMH is a large cap growth tilted industry fund in the technology sector. Way too much technology, way too much USA, way too much growth, way too much large cap. You need: small, value, international, emerging markets as immediate fixes. A good sample of funds to add would be FNDA, FNDB, FNDC, FNDE and FNDF which would fix most of those gaps.
Actually I was saying all of them. FNDA, FNDB, FNDC, FNDE, FNDF all diversify a cap weighted holding. VBR can be used in place of FNDA if you prefer. I think you are getting a better fund for the money but that's a fund picking not an asset allocation discussion.
The closest thing to what you’re thinking of is likely a fundamental weighted index. I use a Schwab product called FNDB for US stocks weighted based on factors other than just market cap. It weights lots of big tech lower but doesn’t ignore them or equal weight them. Kind of a compromise.
I'm not confused you are just wrong. For example: VTV has debt/equity of 1.3x while the corresponding VUG is at 1.1x. If you pick a more value tilted fund like FNDB you are at 1.4x.
There are two corporations: X is the fund itself. Y is a management company hired by X to run the fund. Say we talk about FNDB Schwab's fundamental index for USA large cap stocks. * X = FNDB itself * Y = Schwab If Schwab goes bankrupt X hires another manager and continues. Usually this happens well before Y/Schwab goes bankrupt. If X were to go bankrupt, which can only happen with leveraged funds then Y/Schwab sells off the assets and the fund is classified as worth $0. Same as when a stock goes to $0.