Is Fidelity High Dividend ETF (FDVV) a Strong ETF Right Now?
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?
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Fidelity. It has amassed assets over $517.43 million, making it one of the largest 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
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 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 3.91%.
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 6.46% of the fund's total assets, followed by Microsoft Corp (MSFT) and Procter + Gamble Co/the (PG).
FDVV's top 10 holdings account for about 30.48% of its total assets under management.
Performance and Risk
The ETF has lost about -14.95% and is down about -9.46% so far this year and in the past one year (as of 10/29/2020), respectively. FDVV has traded between $19.70 and $33.45 during this last 52-week period.
The ETF has a beta of 1.03 and standard deviation of 22.46% for the trailing three-year period. With about 118 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 SP U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Invesco High Yield Equity Dividend Achievers ETF has $615.70 million in assets, iShares Core SP U.S. Value ETF has $6.51 billion. 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
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Procter Gamble Company The (PG) : Free Stock Analysis Report
Invesco High Yield Equity Dividend Achievers ETF (PEY): ETF Research Reports
iShares Core SP U.S. Value ETF (IUSV): ETF Research Reports
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