Is the Fidelity High Dividend ETF (FDVV) a solid ETF right now?
THELaunched on 12/09/2016, the Fidelity High Dividend ETF (FDVV) is a smart beta exchange traded fund offering broad exposure to the Style Box – All Cap Value category of the market.
What are Smart Beta ETFs?
Market cap weighted indices were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in the efficiency of the market should consider market capitalization indices, as they replicate market returns in an inexpensive, convenient and transparent manner.
However, some investors believe in the possibility of beating the market with exceptional stock selection and choose another type of fund that follows unweighted capitalization strategies: the smart beta.
This type of index follows this same mindset, as it attempts to select stocks that have the best chance of risk-return performance; unweighted capitalization strategies base selection on certain fundamental characteristics, or a combination of these characteristics.
Methodologies such as equal weight, one of the simpler options, fundamental weight and volatility / momentum weighting are all options available to investors in this space, but not all of them can generate returns. superiors.
Fund promoter and index
FDVV is managed by Fidelity, and this fund has raised over $ 1.12 billion, making it one of the biggest 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 companies that pay dividends and are expected to continue to pay and grow their dividends.
Cost and other expenses
Investors should also pay attention to the expense ratio of an ETF. Lower-cost products will produce better results than higher-cost products, assuming all other metrics remain the same.
The operating expenses on an annual basis are 0.29% for this ETF, making it comparable to most peer products in the space.
Its 12-month dividend yield is 2.92%.
Sector exposure and main titles
Even though ETFs offer diversified exposure that minimizes the risk associated with individual stocks, investors should also look at the actual holdings within the fund. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.30% of the portfolio, the fund has the highest allocation to the information technology sector; Finance and real estate complete the top three.
When it comes to individual holdings, Apple Inc Common Stock Usd.00001 (AAPL) accounts for approximately 4.76% of total assets, followed by Microsoft Corp Common Stock Usd.00000625 (MSFT) and Jpmorgan Chase + Co Common Stock Usd1. 0 (JPM).
FDVV’s top 10 holdings represent approximately 26.38% of its total assets under management.
Return and risk
Since the start of the year, the Fidelity High Dividend ETF has gained around 22.54% so far, and it has grown by around 36.12% in the past 12 months (as of 11/10/2021) . FDVV has traded between $ 26.81 and $ 38.84 in the past 52 weeks.
The ETF has a beta of 1.05 and a standard deviation of 22.91% for the three-year period. With around 123 participations, it effectively diversifies the risk specific to the company.
The Fidelity High Dividend ETF is a reasonable option for investors looking to outperform the Style Box – All Cap Value segment of the market. However, there are other ETFs in the space that investors might consider.
Dimensional US Targeted Value ETF (DFAT) follows ————————————— – and the iShares Core S&P US Value ETF (IUSV) tracks the S&P 900 Value index. Dimensional US Targeted Value ETF has $ 6.25 billion in assets, iShares Core S&P US Value ETF has $ 10.77 billion. DFAT has an expense ratio of 0.34% and the IUSV charges 0.04%.
Investors looking for cheaper and less risky options should consider traditional market capitalization weighted ETFs that aim to match the returns of the Style Box – All Cap Value.
To learn more about this and other ETFs, search for products that match your investment goals, and read articles on the latest developments in the ETF investing world, please visit the Zacks ETF Center.
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Fidelity High Dividend ETFs (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 US Value ETF (IUSV): ETF Research Reports
Dimensional US Targeted Value (DFAT) ETF: ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.