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Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
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Making its debut on 03/29/2011, smart beta exchange traded fund iShares Core High Dividend ETF (HDV - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 Blackrock, and has been able to amass over $8.88 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar Dividend Yield Focus Index.
The Morningstar Dividend Yield Focus Index offers exposure to high quality U.S. domiciled companies that have had strong financial health and an ability to sustain above average dividend payouts.
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.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.08%.
HDV's 12-month trailing dividend yield is 3.30%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 22.50% of the portfolio. Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 9.47% of total assets, followed by At&t Inc (T - Free Report) and Chevron Corp (CVX - Free Report) .
The top 10 holdings account for about 43.61% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF has added roughly 4.99% so far, and it's up approximately 16.91% over the last 12 months (as of 03/22/2022). HDV has traded between $93.51 and $106.24 in this past 52-week period.
The fund has a beta of 0.86 and standard deviation of 21.90% for the trailing three-year period, which makes HDV a medium risk choice in this particular space. With about 81 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Core High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $58.59 billion in assets, Vanguard Value ETF has $101.45 billion. IWD has an expense ratio of 0.19% and VTV 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 - Large 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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Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
Making its debut on 03/29/2011, smart beta exchange traded fund iShares Core High Dividend ETF (HDV - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 Blackrock, and has been able to amass over $8.88 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar Dividend Yield Focus Index.
The Morningstar Dividend Yield Focus Index offers exposure to high quality U.S. domiciled companies that have had strong financial health and an ability to sustain above average dividend payouts.
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.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.08%.
HDV's 12-month trailing dividend yield is 3.30%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 22.50% of the portfolio. Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 9.47% of total assets, followed by At&t Inc (T - Free Report) and Chevron Corp (CVX - Free Report) .
The top 10 holdings account for about 43.61% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF has added roughly 4.99% so far, and it's up approximately 16.91% over the last 12 months (as of 03/22/2022). HDV has traded between $93.51 and $106.24 in this past 52-week period.
The fund has a beta of 0.86 and standard deviation of 21.90% for the trailing three-year period, which makes HDV a medium risk choice in this particular space. With about 81 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Core High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $58.59 billion in assets, Vanguard Value ETF has $101.45 billion. IWD has an expense ratio of 0.19% and VTV 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 - Large 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.