Is Fidelity High Dividend ETF (FDVV) a Strong ETF Right Now?
The exchange-traded smart beta fund Fidelity High Dividend ETF (FDVV) will make its debut on September 12, 2016 and offers investors broad exposure in the Style Box - All Cap Value of the market.
What are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market capitalization weighted indices, a strategy designed to reflect the market or a specific segment of the market.
Market capitalization weighted indices are great for investors who believe in market efficiency. They provide an inexpensive, convenient, and transparent way to replicate market returns.
If you're an investor who prefers to try and beat the market with good stock selection, Smart Beta funds are your best bet. This class of funds is known for pursuing non-capital weighted strategies.
These indices attempt to select stocks that, because of certain fundamental characteristics or a combination of such characteristics, have a better chance of risk-return performance.
While this area offers investors a range of choices, including the simplest of equal weighting methods, fundamental weighting, and volatility / momentum based weighting methods, not all of these strategies have been able to produce superior results.
Fund Sponsor & Index
The fund is sponsored by Fidelity. The company has amassed over $ 539.44 million in assets making it one of the largest ETFs in the Style Box - All Cap Value. The FDVV aims to achieve 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 high and mid-range equity distributing companies that are expected to continue paying and growing their dividends.
Costs and other costs
Cost is an important factor in choosing the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
The annual operating costs for FDVV are 0.29% and are thus at the level of most comparable products in this area.
The fund has a trailing dividend yield of 3.75% for 12 months.
Industry exposure and top holdings
ETFs offer a diversified exposure and thus minimize the risk of individual stocks. However, it is still important to review the holdings of a fund before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
If you look at individual holdings, Apple Inc (AAPL) makes up about 6.62% of the fund's total assets, followed by Microsoft Corp (MSFT) and Procter + Gamble Co / the (PG).
The top 10 positions account for around 31.01% of the total assets under management of the FDVV.
Performance and Risk
Since the beginning of the year, the Fidelity High Dividend ETF has lost around -11.44% and has fallen by around -3.08% in the last 12 months (as of July 10, 2020). FDVV has traded between $ 19.70 and $ 33.45 for the past 52 weeks.
The fund has a beta of 1.03 and standard deviation of 22.28% for the last three year period. With around 119 investments, the company-specific risk is effectively diversified.
The Fidelity High Dividend ETF is a sensible option for investors who want to outperform the Style Box - All Cap Value market segment. However, there are other ETFs in the space that investors might want to consider.
The Invesco High Yield Equity Dividend Achievers ETF (PEY) tracks the NASDAQ US Dividend Achievers 50 Index, and the iShares Core SP US Value ETF (IUSV) tracks the S&P 900 Value Index. The Invesco High Yield Equity Dividend Achievers ETF has assets of $ 638.24 million and the US Value ETF from iShares Core SP has assets of $ 6.71 billion. PEY has an expense ratio of 0.53% and IUSV calculates 0.04%.
Investors looking for cheaper options and lower risk options should consider traditional market cap ETFs that aim to match the returns on the Style Box - All Cap Value.
To learn more about this product and other ETFs, to find products that match your investment objectives, and to read articles on the latest developments in the ETF investment universe, please visit the Zacks ETF Center.
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Fidelity High Dividend ETF (FDVV): ETF Research Reports
Microsoft Corporation (MSFT): Free Stock Research 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 US Value ETF (IUSV): ETF Research Reports
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