Schwab Fundamental Emerging Markets Equity ETF

Schwab Fundamental Emerging Markets Equity ETF (FNDE) is an index fund that holds large companies in emerging markets such as Taiwan, China, Brazil and India. Its RAFI index sizes companies by sales, cash flow, and dividends plus buybacks, not by stock market value. That gives more weight to firms like Petrobras, Vale and big Chinese banks. At 0.39% a year, it costs more than most similar funds.

• Over the year to Oct 27, 2026, FNDE returned +15.0%, 3rd of 9 among similar funds.
• Its 5-year annualized return was +9.6% and its 10-year +9.3%.
• In the 2020 COVID crash it fell 34.5% and regained its old high 8.8 months after the low.
• Its worst full calendar year was 2015 (-20.1%); its best was 2016 (+32.5%).
• The deepest fall in its price history was 43.6% (Sep 3, 2014 to Jan 20, 2016), recovered by Jul 14, 2017.

As of Aug 31, 2026, the fund held 363 securities; the ten largest made up 26.29% of assets.

• Over the three months to Aug 31, 2026, investors added a net $463.0M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: -4.14%, +4.68%, +2.40%.

FNDE tracks the RAFI Fundamental High Liquidity Emerging Markets Index, which RAFI licenses to Charles Schwab Investment Management. Most indexes rank companies by market capitalization, the total value of their shares. This one scores companies on three measures of business size instead: adjusted sales, retained operating cash flow, and dividends plus share buybacks. It starts with the emerging markets companies in RAFI's global universe and ranks them by score. It then keeps the biggest ones until it covers the top 87.5% of the total score. Each company's weight is its share of the total score.

The index picks its companies and weights once a year. The changes are made in stages: the index is split into four equal parts, and one part is rebalanced each quarter. The fund doesn't have to buy every stock in the index. It uses sampling, which means holding a representative subset that is expected to behave like the whole. As of August 31, 2026, it held 363 stocks.

At least 80% of assets go into index stocks or depositary receipts, which are certificates that trade abroad and represent foreign shares. Up to 20% can go elsewhere, mainly into futures to put spare cash to work or to reach markets with local restrictions. The fund does not hedge currencies, so changes in exchange rates against the dollar affect returns. It may also lend out its securities.

• FNDE charges 0.39% a year, versus an average of 0.24% for the similar funds below (8th of 9, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $40 in the first year and $493 over 10 years (assuming a 5% annual return).

It adds emerging markets stocks with a fundamental tilt, but its large drops and focus on Taiwan, China and Brazil make it better suited to a smaller slice of a portfolio than to the core.

FNDE could add emerging markets stocks to a portfolio built mostly on US shares, but it swings hard. It fell 34.5% in the 2020 COVID crash and took 8.8 months to recover. In 2022 it dropped 28.7% and needed 19.5 months to get back. Its deepest fall was 43.6%, from September 2014 to January 2016, and recovery took 17.8 months. Its worst calendar year was 2015, at -20.1%. It launched in 2013, so it has no record from 2008. Someone who has to sell shares in a bad year could end up locking in losses.

The trailing yield was 3.63% as of October 27, 2026, paid twice a year. The fund costs 0.39% a year. In the SEC's standard example, that comes to $493 over 10 years on $10,000. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.