We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
Read MoreHide Full Article
The iShares Core High Dividend ETF (HDV - Free Report) was launched on 03/29/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
HDV is managed by Blackrock, and this fund has amassed over $10.20 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 3.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 22.70% of the portfolio, the fund has heaviest allocation to the Energy sector; Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.15% of the fund's total assets, followed by Chevron Corp (CVX - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 51.06% of total assets under management.
Performance and Risk
So far this year, HDV has added roughly 6.67%, and was up about 11.09% in the last one year (as of 05/03/2024). During this past 52-week period, the fund has traded between $93.77 and $110.21.
The ETF has a beta of 0.81 and standard deviation of 13.44% for the trailing three-year period, making it a medium risk choice in the space. With about 82 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $54.14 billion in assets, Vanguard Value ETF has $111.86 billion. SCHD 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is iShares Core High Dividend ETF (HDV) a Strong ETF Right Now?
The iShares Core High Dividend ETF (HDV - Free Report) was launched on 03/29/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
HDV is managed by Blackrock, and this fund has amassed over $10.20 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 3.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 22.70% of the portfolio, the fund has heaviest allocation to the Energy sector; Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 8.15% of the fund's total assets, followed by Chevron Corp (CVX - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 51.06% of total assets under management.
Performance and Risk
So far this year, HDV has added roughly 6.67%, and was up about 11.09% in the last one year (as of 05/03/2024). During this past 52-week period, the fund has traded between $93.77 and $110.21.
The ETF has a beta of 0.81 and standard deviation of 13.44% for the trailing three-year period, making it a medium risk choice in the space. With about 82 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $54.14 billion in assets, Vanguard Value ETF has $111.86 billion. SCHD 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.