A smart beta exchange traded fund, the Fidelity High Dividend ETF (FDVV) debuted on 09/12/2016, and offers broad exposure to the Style Box - All Cap Value category of the market.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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.
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
Managed by Fidelity, FDVV has amassed assets over $4.55 billion, making it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the Fidelity Core Dividend Index before fees and expenses.
The Fidelity High Dividend Index reflects the performance of stocks of large and mid-capitalization high-dividend-paying companies that are expected to continue to pay and grow their dividends.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.16% for FDVV, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 2.89%.
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.
FDVV's heaviest allocation is in the Information Technology sector, which is about 27.40% of the portfolio. Its Industrials and Energy round out the top three.
Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 6.42% of total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).
The top 10 holdings account for about 32.25% of total assets under management.
Performance and Risk
So far this year, FDVV has added roughly 1.80%, and was up about 21.48% in the last one year (as of 01/29/2025). During this past 52-week period, the fund has traded between $42.79 and $52.63.
The ETF has a beta of 1.02 and standard deviation of 15.27% for the trailing three-year period. With about 124 holdings, it effectively diversifies company-specific risk.
Alternatives
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.
Capital Group Dividend Value ETF (CGDV) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $13.37 billion in assets, iShares Core S&P U.S. Value ETF has $20.35 billion. CGDV has an expense ratio of 0.33% 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.
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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Get it free >>Fidelity High Dividend ETF (FDVV): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
Capital Group Dividend Value ETF (CGDV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
