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

Zacks Equity Research

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

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Fidelity. It has amassed assets over $349.57 M, making it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Fidelity Core Dividend Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 4.24%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 3.38% of the fund's total assets, followed by Jpmorgan Chase + Co (JPM) and Apple Inc (AAPL).

FDVV's top 10 holdings account for about 26.86% of its total assets under management.

Performance and Risk

Year-to-date, the Fidelity High Dividend ETF has added roughly 8.89% so far, and is down about -0.40% over the last 12 months (as of 08/06/2019). FDVV has traded between $26 and $31.10 in this past 52-week period.

FDVV has a beta of 0.85 and standard deviation of 10.77% for the trailing three-year period. With about 133 holdings, it effectively diversifies company-specific risk.

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 $825.26 M in assets, iShares Core S&P U.S. Value ETF has $5.51 B. PEY has an expense ratio of 0.54% 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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