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 Total Market (U.S.) ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 $224.24 M, making it one of the average sized ETFs in the Total Market (U.S.) ETFs. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for FDVV are 0.29%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.87%.
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, Apple Inc (AAPL) accounts for about 4.23% of the fund's total assets, followed by Verizon Communications Inc (VZ) and Microsoft Corp (MSFT).
Its top 10 holdings account for approximately 29.06% of FDVV's total assets under management.
Performance and Risk
So far this year, FDVV has added about 6.51%, and was up about 12.01% in the last one year (as of 11/13/2018). During this past 52-week period, the fund has traded between $27.36 and $31.10.
The fund has a beta of 0.73 and standard deviation of 10.27% for the trailing three-year period. With about 110 holdings, it effectively diversifies company-specific risk.
Fidelity High Dividend ETF is a reasonable option for investors seeking to outperform the Total Market (U.S.) ETFs 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 $752.91 M in assets, iShares Core S&P U.S. Value ETF has $4.69 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 Total Market (U.S.) ETFs.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
FID-CORE DIV (FDVV): ETF Research Reports
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
ISHARS-CR USV (IUSV): ETF Research Reports
PWRSH-HY EQ DV (PEY): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research