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Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the iShares Core High Dividend ETF (HDV - Free Report) is a smart beta exchange traded fund launched on 03/29/2011.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
HDV is managed by Blackrock, and this fund has amassed over $9.74 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Morningstar Dividend Yield Focus Index before fees and expenses.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.08%.
It has a 12-month trailing dividend yield of 4.25%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 22.80% of the portfolio. Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.29% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Chevron Corp (CVX - Free Report) .
The top 10 holdings account for about 51.53% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF has lost about -5.42% so far, and is down about -1.52% over the last 12 months (as of 10/27/2023). HDV has traded between $95.67 and $108.19 in this past 52-week period.
The fund has a beta of 0.81 and standard deviation of 14.28% 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard High Dividend Yield ETF (VYM - Free Report) tracks FTSE High Dividend Yield Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Vanguard High Dividend Yield ETF has $46.47 billion in assets, Vanguard Value ETF has $95.20 billion. VYM has an expense ratio of 0.06% 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?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the iShares Core High Dividend ETF (HDV - Free Report) is a smart beta exchange traded fund launched on 03/29/2011.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
HDV is managed by Blackrock, and this fund has amassed over $9.74 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Morningstar Dividend Yield Focus Index before fees and expenses.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.08%.
It has a 12-month trailing dividend yield of 4.25%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 22.80% of the portfolio. Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.29% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Chevron Corp (CVX - Free Report) .
The top 10 holdings account for about 51.53% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF has lost about -5.42% so far, and is down about -1.52% over the last 12 months (as of 10/27/2023). HDV has traded between $95.67 and $108.19 in this past 52-week period.
The fund has a beta of 0.81 and standard deviation of 14.28% 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard High Dividend Yield ETF (VYM - Free Report) tracks FTSE High Dividend Yield Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Vanguard High Dividend Yield ETF has $46.47 billion in assets, Vanguard Value ETF has $95.20 billion. VYM has an expense ratio of 0.06% 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.