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Is Fidelity High Dividend ETF (FDVV) a Strong ETF Right Now?

Zacks Equity Research

The Fidelity High Dividend ETF (FDVV) was launched on 09/12/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Fidelity. FDVV has been able to amass assets over $455.74 M, making it one of the larger ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the Fidelity Core Dividend Index before fees and expenses.

The Fidelity Core Dividend Index is designed to reflect the performance of stocks of large and mid-capitalization dividend-paying companies that are expected to continue to pay and grow their dividends.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.29% for FDVV, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 4.05%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Apple Inc (AAPL) accounts for about 3.68% of the fund's total assets, followed by Microsoft Corp (MSFT) and Jpmorgan Chase + Co (JPM).

FDVV's top 10 holdings account for about 28.01% of its total assets under management.

Performance and Risk

The ETF has added about 18.96% so far this year and is up about 12.64% in the last one year (as of 11/26/2019). In the past 52-week period, it has traded between $26 and $31.43.

The ETF has a beta of 0.86 and standard deviation of 11% for the trailing three-year period. With about 40 holdings, it has more concentrated exposure than peers.

Alternatives

Fidelity High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Invesco High Yield Equity Dividend Achievers ETF (PEY) tracks NASDAQ US Dividend Achievers 50 Index and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Invesco High Yield Equity Dividend Achievers ETF has $903.56 M in assets, iShares Core S&P U.S. Value ETF has $6.62 B. PEY has an expense ratio of 0.53% and IUSV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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Fidelity High Dividend ETF (FDVV): ETF Research Reports
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
 
Invesco High Yield Equity Dividend Achievers ETF (PEY): ETF Research Reports
 
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