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Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares Core High Dividend ETF (HDV - Free Report) debuted on 03/29/2011, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Blackrock, HDV has amassed assets over $10.03 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. HDV, before fees and expenses, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.08% for HDV, making it one of the least expensive products in the space.
HDV's 12-month trailing dividend yield is 3.69%.
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.
For HDV, it has heaviest allocation in the Healthcare sector --about 23.40% of the portfolio --while Energy and Consumer Staples round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.20% of total assets, followed by Abbvie Inc (ABBV - Free Report) and Verizon Communications Inc (VZ - Free Report) .
HDV's top 10 holdings account for about 52.37% of its total assets under management.
Performance and Risk
So far this year, HDV has added about 3.35%, and is up about 8.74% in the last one year (as of 02/29/2024). During this past 52-week period, the fund has traded between $93.77 and $106.
HDV has a beta of 0.82 and standard deviation of 13.60% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 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 $53.59 billion in assets, Vanguard Value ETF has $110.10 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?
A smart beta exchange traded fund, the iShares Core High Dividend ETF (HDV - Free Report) debuted on 03/29/2011, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Blackrock, HDV has amassed assets over $10.03 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. HDV, before fees and expenses, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.08% for HDV, making it one of the least expensive products in the space.
HDV's 12-month trailing dividend yield is 3.69%.
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.
For HDV, it has heaviest allocation in the Healthcare sector --about 23.40% of the portfolio --while Energy and Consumer Staples round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.20% of total assets, followed by Abbvie Inc (ABBV - Free Report) and Verizon Communications Inc (VZ - Free Report) .
HDV's top 10 holdings account for about 52.37% of its total assets under management.
Performance and Risk
So far this year, HDV has added about 3.35%, and is up about 8.74% in the last one year (as of 02/29/2024). During this past 52-week period, the fund has traded between $93.77 and $106.
HDV has a beta of 0.82 and standard deviation of 13.60% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 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 $53.59 billion in assets, Vanguard Value ETF has $110.10 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.