FDVV - Beyond The Rally: Why SCHD Remains My Top Pick Over FDVV

2024-04-09 09:03:44 ET

Summary

• The FDVV ETF tracks the Fidelity High Dividend Index and has recently outperformed similar ETFs like SCHD and VYM.
• FDVV's investment strategy is questionable for its lax methodology and lack of focus on true dividend yield.
• The FDVV ETF has higher fees compared to similar ETFs and carries additional risk due to its practice of lending securities.
• SCHD's unique investing methodology makes it an ideal choice for dividend-seekers. Even though it has underperformed recently, it remains my top recommendation for investors focused on dividend yield.

The Fidelity High Dividend ETF ( FDVV ) follows Fidelity's High Dividend Index, which targets large and mid-cap companies paying dividends. Fidelity's ETF sheet also mentions that these companies have potential for dividend growth. The fund is domestic, meaning it is invested in the US market, accounting for about 90% of its holdings. However, it also includes a 4% exposure to Japan and 2.5% to the UK. This international exposure is likely due to the fund's practice of lending securities to generate additional income, which may involve transactions on non-US stock exchanges....

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