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Fundamental ETFs

A fundamental ETF is a so-called smart beta ETF that follows an index that selects stocks to buy using some fundamental measure about a company, such as the company's total revenue, or total stockholders equity, or debt to equity ratio. In the investing world, the term "fundamental" generally refers to information about a company that you can obtain from the company's financial statements. Some fundamental indexes also weight the stocks they are holding not on each stock's market capitalization but instead using each stock's total sales revenue, or some other fundamental measure of a company's size.

The idea is to select "good companies" based on each company's financial statements. Proponents of fundamental indexes believe that traditional stock market indexes that select and weight stocks using each company's market capitalization end up holding too many stocks that are "overvalued" or "overhyped".

We end up classifying most fundamental ETFs as "multi-factor" ETFs, because many fundamental ETFs select stocks using some measure of the company's earnings, which is the quality factor, or they select stocks with dividends.

The fundamental ETFs use different approaches, so let's run through a few examples of what they are doing.

FNDB, the Schwab Fundamental U.S. Broad Market Index ETF, tracks the Russell RAFI U.S. index, which selects and weights stocks using the average of three fundamental measures of company size: retained operating cash flow, adjusted sales, and dividends plus buybacks. FNDB is very much a "multi-factor" ETF, because by selecting stocks based on retained operating cash flow and dividends it is using the "quality" factor, while also selecting stocks based on dividends plus stock buybacks. FNDB also is using an alternate weighting scheme.

RWL, the Revenue Shares Large Cap Fund ETF, tracks the S&P 500 but weights the stocks using each company's top line revenue rather than market capitalization.

FNDB and RWL are good examples of the challenge investors face when looking at smart beta ETFs:

  • Smart beta ETFs are fairly new
  • Every smart beta ETF seems to use a slightly different methodology (it seems like no two smart beta ETFs are ever the same)
  • It is hard to understand what "factor tilts" you are getting

One thing to always worry about with these smart beta ETFs is the unintended factor tilts that occur. RWL weights the S&P 500 using top line revenue. Is that really a good thing? The data provided by RWL's website clearly shows a value tilt, but it is hard to know what other factor tilts occur by doing this. Quality is one of the most well documented factors -- all things being equal, the stocks of highly profitable companies tend to outperform over long periods of time. Does ranking the S&P 500 by top line revenue unintentionally reduce your exposure to the "quality" factor? It is hard to know.

Both FNDB and RWL have decent track records so far, so we don't want to sound like we are being too critical. We are just trying to illustrate the difficulties associated with analyzing smart beta ETFs. Especially since every one seems to use a slightly different approach.

Here are the fundamental ETFs that use fundamental factors as an investment factor:

NameSymbolLast priceCurrencyAUMExpense ratio, %Inception date
Spx Flow IncXNYS:FLOW86.24USDSep 17, 2015
WBI Power Factor High Dividend ETFARCX:WBIY38.95USDDec 22, 2016
Hoya Capital Housing ETFARCX:HOMZ45.48USDMar 20, 2019
U.S. Diversified Real Estate ETFARCX:PPTY33.58USDMar 27, 2018
US Global GO Gold and Precious Metal Miners ETFARCX:GOAU48.90USDJun 29, 2017
Virtus Real Asset Income ETFARCX:VRAI28.76USDFeb 08, 2019
Fidelity International High Dividend ETFARCX:FIDI29.23USDJan 25, 2018
Fidelity Quality Factor ETFARCX:FQAL84.84USDSep 16, 2016
First Trust SMID Cap Rising Dividend Achievers ETFXNAS:SDVY43.64USDNov 03, 2017
FlexShares High Yield Value-Scored Bond Index FundARCX:HYGV40.18USDJul 18, 2018
Global X S&P 500 Quality Dividend ETFARCX:QDIV40.85USDJul 13, 2018
Global X Aging Population ETFXNAS:AGNG38.24USDMay 09, 2016
IQ 500 InternationalARCX:IQIN32.60USDDec 13, 2018
Innovator Deepwater Frontier Tech ETFARCX:LOUP89.06USDAug 02, 2018
Invesco BuyBack Achievers ETFXNAS:PKW152.85USDDec 20, 2006
iShares Cohen & Steers REIT ETFBATS:ICF67.78USDFeb 02, 2001
iShares MSCI USA Quality Factor ETFBATS:QUAL223.62USDJul 18, 2013
iShares Fallen Angels USD Bond ETFXNAS:FALN27.03USDJun 21, 2016
iShares International Dividend Growth ETFBATS:IGRO92.49USDMay 19, 2016
iShares U.S. Infrastructure ETFBATS:IFRA59.20USDApr 05, 2018
iShares Core Dividend ETFBATS:DIVB69.11USDNov 09, 2017
JPMorgan USD Emerging Markets Sovereign Bond ETFARCX:JPMB39.68USDJan 31, 2018
Nuveen Enhanced Yield U.S. Aggregate Bond ETFARCX:NUAG20.67USDSep 15, 2016
Invesco S&P SmallCap Quality ETFXNYS:XSHQ42.27USDApr 06, 2017
Procure Space ETFXNYS:UFO43.98USDApr 11, 2019
ProShares Long Online/Short Stores ETFARCX:CLIX60.89USDNov 16, 2017
SPDR S&P Emerging Markets Dividend ETFARCX:EDIV41.89USDFeb 23, 2011
SPDR S&P Kensho New Economies Composite ETFARCX:KOMP67.57USDOct 22, 2018
LeaderShares AlphaFactor US Core Equity ETFARCX:LSAF56.22USDOct 02, 2018
VanEck Morningstar Global Wide Moat ETFBATS:MOTG40.69USDOct 31, 2018
VanEck Durable High Dividend ETFBATS:DURA39.76USDOct 31, 2018
WisdomTree Europe Hedged Equity FundARCX:HEDJ57.73USDJan 15, 2010
iShares JPX-Nikkei 400 ETFARCX:JPXN102.78USDOct 26, 2001
First Trust DJ Select MicroCap ETFARCX:FDM92.43USDSep 30, 2005
First Trust Morningstar ETFARCX:FDL53.16USDMar 15, 2006
First Trust Capital Strength ETFXNAS:FTCS101.30USDJul 11, 2006
WisdomTree U.S. SmallCap FundARCX:EES68.27USDFeb 23, 2007
WisdomTree New Economy Real Estate FundARCX:WTRE23.61USDJun 05, 2007
Invesco S&P International Developed Quality ETFXNYS:IDHQ28.83USDJun 13, 2007
Invesco FTSE RAFI Emerging Markets ETFXNYS:PXH20.27USDSep 27, 2007
iShares Morningstar Large-Cap ETFARCX:ILCB106.65USDJul 13, 2004
iShares Morningstar Mid-Cap ETFARCX:IMCB99.29USDJul 13, 2004
iShares Morningstar Small-Cap ETFARCX:ISCB75.55USDJul 13, 2004
WisdomTree Japan Hedged Equity FundARCX:DXJ180.10USDJun 16, 2006
Invesco Fundamental High Yield Corporate Bond ETFXNYS:PHB18.13USDNov 15, 2007
First Trust DJ Global Select DividendARCX:FGD35.63USDNov 27, 2007
WisdomTree India Earnings FundARCX:EPI42.98USDFeb 26, 2008
Invesco Exchange-Traded Fund Trust II Invesco S&P MidCap 400 Revenue ETFXNYS:RWK116.85USDFeb 20, 2008
Columbia Research Enhanced Emerging Economies ETFARCX:ECON35.53USDSep 14, 2010
iShares Core High Dividend ETFARCX:HDV29.44USDMar 31, 2011
Invesco Fundamental Investment Grade Corporate Bond ETFXNYS:PFIG23.43USDSep 15, 2011
Schwab US Dividend Equity ETFARCX:SCHD34.90USDOct 20, 2011
iShares Emerging Markets Dividend Index Fund Exchange Traded FundARCX:DVYE34.99USDFeb 24, 2012
VanEck Fallen Angel High Yield Bond ETFXNYS:ANGL29.03USDApr 11, 2012
VanEck Morningstar Wide Moat ETFBATS:MOAT114.99USDApr 25, 2012
WisdomTree U.S. LargeCap FundARCX:EPS80.99USDFeb 23, 2007
FlexShares Morningstar Developed Markets ex-US Factor Tilt Index FundARCX:TLTD104.51USDOct 02, 2012
FlexShares Morningstar Emerging Markets Factor Tilt Index FundARCX:TLTE77.13USDOct 02, 2012
iPath Select MLP ETNBATS:ATMP37.10USDMar 13, 2013
Barron's 400 ETFARCX:BFOR24.12USDJun 04, 2013
Schwab Fundamental U.S. Broad Market ETFARCX:FNDB31.67USDAug 15, 2013
Schwab Fundamental International Small Equity ETFARCX:FNDC51.34USDAug 15, 2013
Schwab Fundamental Emerging Markets Equity ETFARCX:FNDE42.00USDAug 15, 2013
Schwab Fundamental International Equity ETFARCX:FNDF55.43USDAug 15, 2013
Schwab Fundamental U.S. Large Company ETFARCX:FNDX32.51USDAug 15, 2013
Schwab Fundamental U.S. Small Company ETFARCX:FNDA37.33USDAug 15, 2013
First Trust Rising Dividend Achievers ETFXNAS:RDVY82.06USDJan 07, 2014
iShares Core Dividend Growth ETFARCX:DGRO79.36USDJun 12, 2014
FlexShares Credit-Scored US Corporate Bond Index FundXNAS:SKOR47.95USDNov 13, 2014
ALPS Medical Breakthroughs ETFARCX:SBIO67.09USDDec 30, 2014
First Trust Dividend Strength ETFXNAS:FTDS66.46USDDec 23, 2014
U.S. Global Jets ETFARCX:JETS29.18USDApr 30, 2015
FlexShares Trust FlexShares Credit-Scored US Long Corporate Bond Index FundBATS:LKOR40.29USDSep 24, 2015
SPDR Russell 1000 Yield Focus ETFARCX:ONEY135.24USDDec 02, 2015
SPDR FactSet Innovative Technology ETFARCX:XITK200.44USDJan 13, 2016
ProShares MSCI Emerging Markets Dividend Growers ETFBATS:EMDV47.63USDJan 27, 2016
WisdomTree U.S. MidCap FundARCX:EZM76.08USDFeb 23, 2007
Invesco S&P 500 Quality ETFXNYS:SPHQ67.24USDDec 06, 2005
WisdomTree U.S. High Yield Corporate Bond FundBATS:QHY45.67USD
iShares MSCI Intl Quality Factor ETFARCX:IQLT51.67USDJan 21, 2015
Global X Millennial Consumer ETFXNAS:MILN46.81USDMay 04, 2016
ETF Series Solutions U.S. Global Sea to Sky Cargo ETFXNYS:SEAUSDJun 11, 2010
iShares MSCI USA Size Factor ETFARCX:SIZE183.85USDApr 18, 2013
American Century Quality Diversified International ETFARCX:QINT72.83USDSep 18, 2018
Xtrackers Russell 1000 US Quality at a Reasonable Price ETF ETFARCX:QARP68.34USDApr 05, 2018
Robo Global Healthcare Technology and Innovation ETFARCX:HTEC42.71USDJun 25, 2019
Global X Thematic Growth ETFXNAS:GXDW24.42USDOct 25, 2019
Goldman Sachs Access High Yield Corporate Bond ETFARCX:GHYB44.62USDSep 25, 2017
Goldman Sachs Access Investment Grade Corporate Bond ETFARCX:GIGB44.96USDJun 08, 2017
GraniteShares Nasdaq Select Disruptors ETFARCX:DRUP70.58USDOct 07, 2019
Invesco India ETFARCX:IMVP20.03USDMar 05, 2008
Invesco S&P MidCap 400 GARP ETFARCX:GRPM145.76USDDec 03, 2010
Invesco S&P 500 GARP ETFARCX:SPGP126.85USDJun 16, 2011
Invesco Bloomberg Analyst Rating Improvers ETFARCX:UPGD83.21USDMay 19, 2006
Invesco FTSE RAFI US 1500 Small-Mid ETFXNAS:PRFZ55.20USDSep 20, 2006
Invesco FTSE RAFI US 1000 ETFARCX:PRF56.12USDDec 19, 2005
Invesco AI and Next Gen Software ETFARCX:IGPT91.58USDJun 23, 2005
Invesco Next Gen Media and Gaming ETFARCX:GGME64.18USDJun 23, 2005
Invesco International BuyBack Achievers ETFXNAS:IPKW60.49USDFeb 27, 2014
Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETFARCX:PDN47.54USDSep 27, 2007
Invesco FTSE RAFI Developed Markets ex-U.S. ETFARCX:PXF79.38USDJun 25, 2007
Invesco Exchange-Traded Fund Trust II Invesco S&P Ultra Dividend Revenue ETFARCX:RDIV63.20USDSep 30, 2013
Invesco Exchange-Traded Fund Trust II Invesco S&P SmallCap 600 Revenue ETFARCX:RWJ61.11USDFeb 19, 2008
Invesco Exchange-Traded Fund Trust II Invesco S&P 500 Revenue ETFARCX:RWL134.16USDFeb 19, 2008
Invesco RAFI Strategic US ETFXNAS:IUS70.03USDSep 12, 2018
Invesco Investment Grade Defensive ETFARCX:IIGD24.27USDJul 25, 2018
iShares U.S. Tech Breakthrough Multisector ETFARCX:TECB76.22USDJan 13, 2020
JPMorgan U.S. Quality Factor ETFARCX:JQUA74.89USDNov 09, 2017
Pacer US Export Leaders ETFARCX:PEXL71.59USDOct 18, 2018
PIMCO RAFI ESG U.S. ETFARCX:RAFE50.41USDDec 19, 2019
Sprott Gold Miners ETFARCX:SGDM82.90USDJul 15, 2014
SPDR Portfolio Corporate Bond ETFARCX:SPBO28.45USDApr 06, 2011
Roundhill Sports Betting & iGaming ETFARCX:BETZ19.64USDJun 04, 2020
WisdomTree U.S. Short Term Corporate Bond FundBATS:QSIG48.05USD
WisdomTree U.S. Corporate Bond FundBATS:QIG43.51USDNov 17, 2010
ALPS O'Shares Global Internet Giants ETFBATS:OGIG51.60USDJun 05, 2018
Siren Nasdaq NexGen Economy ETFXNAS:BLCN24.27USDJan 17, 2018
American Customer Satisfaction ETFBATS:ACSI77.46USDNov 07, 2016
EA Series Trust Strive U.S. Semiconductor ETFXNYS:SHOC102.66USDOct 06, 2022
Amplify ETF Trust Amplify Thematic All-Stars ETFARCX:MVPS23.63USDJul 21, 2021
Elevation Series Trust SRH U.S. Quality ETFARCX:SRHQ49.99USDOct 05, 2022
Direxion Daily NYSE FANG+ Bull 2X SharesARCX:FNGG269.42USDSep 30, 2021
ETF Series Solutions Blue Horizon BNE ETFARCX:BNE22.49USDDec 09, 2020
ETF Series Solutions AAM Transformers ETFARCX:TRFM59.64USDJul 12, 2022
Hoya Capital High Dividend Yield ETFARCX:RIET9.42USDSep 22, 2021
ROBO Global Artificial Intelligence ETFARCX:THNQ90.94USDMay 18, 2020
Fidelity Metaverse ETFXNAS:FMET38.77USDApr 21, 2022
First Trust Nasdaq Lux Digital Health Solutions ETFXNAS:EKG22.05USDMar 23, 2022
Global X Telemedicine & Digital Health ETFXNAS:EDOC9.47USDJul 29, 2020
Goldman Sachs ETF Trust Goldman Sachs Access Emerging Markets USD Bond ETFBATS:GEMD41.63USDFeb 18, 2022
Goldman Sachs ETF Trust Goldman Sachs Access U.S. Aggregate Bond ETFARCX:GCOR40.54USDSep 17, 2020
Golden Sachs ETF Trust Goldman Sachs Access Investment Grade Corporate 1-5 Year Bond ETFARCX:GSIG47.22USDJul 13, 2020
NYLI Global Equity R&D Leaders ETFXNAS:WRND43.22USDFeb 08, 2022
NYLI U.S. Large Cap R&D Leaders ETFXNAS:LRND46.58USDFeb 08, 2022
iShares Future Cloud 5G and Tech ETFARCX:IDAT36.73USDJun 14, 2021
iShares Emergent Food and AgTech Multisector ETFXNAS:IVEG21.59USDApr 27, 2022
Roundhill Ball Metaverse ETFARCX:METV20.31USDJun 30, 2021
Monarch ProCap Index ETFBATS:MPRO32.55USDMar 29, 2021
Monarch Blue Chips Core Index ETFBATS:MBCC39.98USDMar 29, 2021
Monarch Ambassador Income Index ETFBATS:MAMB23.92USDMar 29, 2021
Pacer BioThreat Strategy ETFBATS:VIRS40.03USDJun 29, 2020
ProShares Trust ProShares S&P Global Core Battery Metals ETFARCX:ION53.68USDDec 01, 2022
The RBB Fund, Inc. Motley Fool Capital Efficiency 100 Index ETFBATS:TMFE31.17USDDec 31, 2021
TrimTabs ETF Trust Donoghue Forlines Risk Managed Innovation ETFBATS:ABOT44.58USDDec 08, 2020
TrimTabs ETF Trust Donoghue Forlines Tactical High Yield ETFBATS:ABXB19.16USDDec 08, 2020
Donoghue Forlines Yield Enhanced Real Asset ETFBATS:ABLD32.72USDDec 15, 2021
ETRACS 2x Leveraged US Dividend Factor TR ETNARCX:SCDL61.65USDFeb 09, 2021
ETRACS 2x Leveraged MSCI US Quality Factor TR ETNARCX:QULL70.67USDFeb 09, 2021
ETRACS 2x Leveraged IFED Invest with the Fed TR Index ETNARCX:FEDL55.71USDSep 17, 2021
ETRACS IFED Invest with the Fed TR Index ETNARCX:IFED47.06USDSep 16, 2021
VanEck Moody's Analytics BBB Corporate Bond ETFBATS:MBBB20.98USDDec 02, 2020
VanEck Moody's Analytics IG Corporate Bond ETFBATS:MIG20.93USDDec 02, 2020
WisdomTree Cybersecurity FundXNAS:WCBR41.90USDJan 28, 2021
Amplify ETF Trust Amplify Natural Resources Dividend Income ETFARCX:NDIV34.99USDAug 24, 2022
First Trust Exchange-Traded Fund First Trust S&P 500 Diversified Free Cash Flow ETFARCX:FCFY30.59USDAug 28, 2023
Amplify Cash Flow Dividend Leaders ETFXNAS:COWS40.44USDSep 13, 2023
First Trust Exchange-Traded Fund II First Trust Emerging Markets Human Flourishing ETFARCX:FTHF47.59USDOct 03, 2023
Invesco Nasdaq Free Cash Flow Achievers ETFXNAS:QOWZ38.12USDDec 06, 2023
Themes Natural Monopoly ETFXNAS:CZAR33.01USDDec 13, 2023
Themes US Small Cap Cash Flow Champions ETFXNAS:SMCF40.00USDMar 13, 2024
Themes US R&D Champions ETFXNAS:USRD37.24USD
Themes US Cash Flow Champions ETFXNAS:USCF38.96USDMar 13, 2024
DoubleLine ETF Trust DoubleLine Fortune 500 Equal Weight ETFARCX:DFVE37.19USDFeb 01, 2024
Northern Lights Fund Trust IV Monarch Volume Factor Global Unconstrained Index ETFBATS:MVFG35.36USD
Northern Lights Fund Trust IV Monarch Volume Factor Dividend Tree Index ETFBATS:MVFD31.48USD
Northern Lights Fund Trust IV Monarch Dividend Plus Index ETFBATS:MDPL30.93USD
Tidal Trust II iREIT - MarketVector Quality REIT Index ETFARCX:IRET21.29USDMar 06, 2024
Invesco Exchange-Traded Fund Trust II Invesco S&P SmallCap 600 GARP ETFARCX:GRPZ32.99USDMar 27, 2024
First Trust Exchange-Traded Fund VI First Trust Bloomberg R&D Leaders ETFARCX:RND33.08USD
Simplify Exchange Traded Funds Simplify Next Intangible Core Index ETFBATS:NXTI36.54USD
Harbor ETF Trust Harbor AlphaEdge Small Cap Earners ETFARCX:EBIT40.07USDOct 22, 2008
First Trust Exchange-Traded Fund VI First Trust S&P 500 Economic Moat ETFARCX:EMOT27.06USD
Amplify ETF Trust Amplify AI Powered Equity ETFARCX:AIEQ50.70USDOct 18, 2017