Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Fidelity High Dividend ETF (FDVV) is a smart beta exchange traded fund launched on 09/12/2016.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 managed by Fidelity, and has been able to amass over $3.10 billion, which makes 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 High Dividend Index reflects the performance of stocks of large and mid-capitalization high-dividend-paying companies that are expected to continue to pay and grow their dividends.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FDVV are 0.15%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.92%.
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.
Representing 22.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Industrials and Energy round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 6.10% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
The top 10 holdings account for about 30.1% of total assets under management.
Performance and Risk
The ETF has added roughly 16.39% so far this year and it's up approximately 21.50% in the last one year (as of 07/23/2024). In the past 52-week period, it has traded between $37.10 and $48.72.
The fund has a beta of 1.02 and standard deviation of 15.36% for the trailing three-year period. With about 118 holdings, it effectively diversifies company-specific risk.
Alternatives
Fidelity High Dividend ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $10.49 billion in assets, iShares Core S&P U.S. Value ETF has $18.07 billion. DFAT has an expense ratio of 0.28% 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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Get it free >>Fidelity High Dividend ETF (FDVV): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
Dimensional U.S. Targeted Value ETF (DFAT): ETF Research Reports
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