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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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
The fund is sponsored by Blackrock. It has amassed assets over $11.30 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for HDV are 0.08%, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 3.32%.
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.
For HDV, it has heaviest allocation in the Energy sector --about 27.30% of the portfolio --while Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 9.87% of total assets, followed by Chevron Corp (CVX - Free Report) and Johnson & Johnson (JNJ - Free Report) .
The top 10 holdings account for about 53.8% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF return is roughly 20.31% so far, and was up about 28.51% over the last 12 months (as of 11/11/2024). HDV has traded between $95.84 and $119.71 in this past 52-week period.
The fund has a beta of 0.79 and standard deviation of 13.29% for the trailing three-year period, which makes HDV a medium risk choice in this particular 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 $65.55 billion in assets, Vanguard Value ETF has $132.09 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.
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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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
The fund is sponsored by Blackrock. It has amassed assets over $11.30 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for HDV are 0.08%, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 3.32%.
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.
For HDV, it has heaviest allocation in the Energy sector --about 27.30% of the portfolio --while Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM - Free Report) accounts for about 9.87% of total assets, followed by Chevron Corp (CVX - Free Report) and Johnson & Johnson (JNJ - Free Report) .
The top 10 holdings account for about 53.8% of total assets under management.
Performance and Risk
Year-to-date, the iShares Core High Dividend ETF return is roughly 20.31% so far, and was up about 28.51% over the last 12 months (as of 11/11/2024). HDV has traded between $95.84 and $119.71 in this past 52-week period.
The fund has a beta of 0.79 and standard deviation of 13.29% for the trailing three-year period, which makes HDV a medium risk choice in this particular 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 $65.55 billion in assets, Vanguard Value ETF has $132.09 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.