In mid-August, Charles Schwab rolled out its new lineup of six fundamental ETFs linked to Rob Arnott's Research Affiliates' methodology that will go head-to-head with a lineup from PowerShares, among others.
The six funds, five of which already exist in mutual fund wrappers with a combined $4.5 billion in assets gathered since their launch in 2007, are also going to be part of Schwab's OneSource platform—a broad free-ETF trading program that involves 90 non-Schwab ETFs as well as its own proprietary funds launched in February.
The new funds, and their expense ratios, are as follows:
- Schwab Fundamental U.S. Broad Market Index ETF (FNDB), which seeks to track the Russell Fundamental U.S. Index—0.32 percent.
- Schwab Fundamental U.S. Large Company Index ETF (FNDX), which seeks to track the Russell Fundamental U.S. Large Company Index—0.32 percent.
- Schwab Fundamental U.S. Small Company Index ETF (FNDA), which seeks to track the Russell Fundamental U.S Small Company Index—0.32 percent.
- Schwab Fundamental International Large Company Index ETF (FNDF), which seeks to track the Russell Fundamental Developed ex-U.S. Large Company Index—0.32 percent.
- Schwab Fundamental International Small Company Index ETF (FNDC), which seeks to track the Russell Fundamental Developed ex-U.S. Small Company Index—0.46 percent.
- Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE), which seeks to track the Russell Fundamental Emerging Markets Large Company Index—0.46 percent.
PowerShares also offers an extensive roster of RAFI-linked ETFs—18 in total—that look to provide investors with access to fundamentally weighted strategies that complement market-cap approaches. The most successful of those competing funds is the $2.24 billion large-cap PowerShares FTSE RAFI US 1000 (PRF | A-87). PRF, which has a 0.39 percent expense ratio, looks to be comparable to FNDX, the new Schwab ETF targeting large U.S. companies. The index methodologies of the two ETF families are very similar, but look at slightly different sets of factors.