How does an investment fund that has beaten the market for years suddenly find itself lagging behind? The Schwab Fundamental U.S. Large Company Index ETF, known by its ticker FNDX, faces exactly this puzzling situation as it navigates through 2025.
FNDX’s recent underperformance puzzles investors after years of market-beating returns through its fundamental weighting strategy.
FNDX has built its reputation on a clever approach. Instead of simply following the biggest companies by market value, it weights holdings based on fundamental business metrics like sales and cash flow. This strategy has paid off handsomely over the long haul. The fund’s five-year return stands at an impressive 14.64%, actually beating the Russell 1000 benchmark’s 16.0% when comparing apples to apples. Over ten years, FNDX delivered 13.39% annually to investors.
Yet something shifted recently. In the most recent one-year period ending September 2025, FNDX’s NAV returned just 12.0% while the Russell 1000 surged ahead at 17.7%. That’s a significant gap for a fund that previously kept pace with or exceeded its benchmark.
The fund’s current technical picture tells an interesting story. Trading around $27.35, FNDX sits comfortably above its 30-day moving average of $27.32. The relative strength indicator reads 64, suggesting moderate momentum without being overbought. What really catches attention is the implied volatility at 30.06%, dramatically higher than the historical volatility of 9.19%. This suggests options traders expect bigger price swings ahead than the fund typically experiences.
Managing over $21.5 billion in assets with a rock-bottom 0.25% management fee, FNDX remains cost-effective for long-term investors. The fund currently offers a 1.61% dividend yield and maintains a beta of 0.93, meaning it moves slightly less dramatically than the overall market. With 713 holdings spread across the portfolio, the fund provides broad diversification beyond its concentrated top positions. Recent momentum has been notable, with the fund posting a 52-week return of 19.68% that nearly reached its 52-week high of $28.16.
The ALTAR Score of 6.9% places FNDX in the 75th percentile among U.S. equity funds, showing it still performs better than three-quarters of competitors. Perhaps the recent underperformance represents just a temporary detour rather than a permanent roadblock. After all, fundamental indexing was designed for patient investors who believe business fundamentals ultimately drive returns, even when short-term numbers tell a different tale. Investors seeking predictable income and capital preservation may contrast this with fixed income strategies.
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