FNDC vs HSCZ

FNDCASchwab Fundamental International Small Company Index ETF

HSCZCiShares Currency Hedged MSCI EAFE Small-Cap ETF

In short

FNDC Schwab's contrarian cut of international small caps: instead of letting share price set position size, FNDC weights roughly 1,600 developed-market small companies by fundamental measures of size, which bakes in a value tilt.

HSCZ The hedged twin of the standard EAFE small-cap fund: the same universe of smaller companies in developed markets outside the US and Canada, with the currency swing dialed out by tracking a 100% hedged-to-USD index.

Stated mandate

FNDC The fund seeks to track, before fees and expenses, the total return of an index measuring small non-U.S. developed-market companies according to fundamental size and weighting.

HSCZ The fund seeks to track an index of small-cap equities in international markets excluding the United States and Canada, while reducing the effect of currency fluctuations.

Why people hold it

• FNDC Weights companies by fundamental measures of size rather than share price, so a stock's weight does not climb simply because the market bid it up.
• Roughly 1,600 names spread across developed markets outside the US. Broad enough that no single small-cap story drives the fund.
• Trading since 2013 and now a multi-billion-dollar fund that stays inside its lane: developed-market small companies, no drift into emerging markets or larger caps.
• At 0.39%, one of the better-standing implementations in a peer group where the typical fund charges about the same.

• HSCZ Tracks the MSCI EAFE Small Cap 100% Hedged to USD Index, so the euro, yen and pound drive less of the result and the underlying businesses drive more.ishares.com
• Currency hedging is everywhere in large-cap international funds and scarce down in small caps. This is BlackRock's version of that rarer combination.ishares.com
• Broad, rules-based index exposure across developed markets outside the US and Canada, diversified rather than concentrated, and running under iShares since 2015.

Worth knowing

• FNDC The fundamental weighting costs extra: plain cap-weighted siblings SCHC and VSS charge 0.06% against 0.39% here.
• A value tilt means results can diverge from standard cap-weighted international small-cap indexes for long stretches, in either direction.
• Cash comes in lumps: distributions are annual or semiannual, not monthly, and the fund trades moderately rather than like the category's busiest names.

• HSCZ Hedging is not free. The expense ratio sits well above the median for international small-cap funds, and above its own unhedged sibling SCZ.
• The hedge cuts both ways. When the dollar weakens, unhedged peers such as SCZ and VSS collect that currency tailwind and this fund, by design, does not.
• A smaller, thinly traded fund next to the giants of its category, so bid-ask spreads can be wider and limit orders matter more.

Full FNDC profile⁠

Full HSCZ profile⁠