Making its debut on 09/12/2016, smart beta exchange traded fund Fidelity High Dividend ETF (
FDVV Quick Quote FDVV - Free Report) provides investors 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
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 Fidelity, and has been able to amass over $546.16 million, which makes it one of the largest ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Fidelity Core Dividend Index.
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
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 0.29%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.97%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Apple Inc (
AAPL Quick Quote AAPL - Free Report) accounts for about 6.62% of the fund's total assets, followed by Microsoft Corp ( MSFT Quick Quote MSFT - Free Report) and Procter + Gamble Co/the ( PG Quick Quote PG - Free Report) .
FDVV's top 10 holdings account for about 31.01% of its total assets under management.
Performance and Risk
The ETF has lost about -9.96% and is down about -2.20% so far this year and in the past one year (as of 09/15/2020), respectively. FDVV has traded between $19.70 and $33.45 during this last 52-week period.
FDVV has a beta of 1.03 and standard deviation of 22.12% for the trailing three-year period. With about 119 holdings, it effectively diversifies company-specific risk.
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 Quick Quote PEY - Free Report) tracks NASDAQ US Dividend Achievers 50 Index and the iShares Core SP U.S. Value ETF ( IUSV Quick Quote IUSV - Free Report) tracks S&P 900 Value Index. Invesco High Yield Equity Dividend Achievers ETF has $645.41 million in assets, iShares Core SP U.S. Value ETF has $6.74 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.
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.