Summary
- FIDI is an international high-yield equity ETF by Fidelity.
- More than half of asset value is in European countries and 25% is in Financials.
- International equities have been lagging the U.S. market for years, especially in the high-yield category.
- FIDI has been lagging HDEV and IDV in the same asset category since inception in 2018.
FIDI strategy and portfolio
The Fidelity International High Dividend ETF ( FIDI ) has been tracking the Fidelity International High Dividend Index since 01/16/2018. It has 103 holdings, a 12-month distribution yield of 6.01% and a total expense ratio of 0.39%. It pays quarterly distributions.
As described by Fidelity, the index “is designed to reflect the performance of large and mid-capitalization developed international high dividend-paying stocks that are expected to continue to pay and grow their dividends.”
Over 87% of asset value is in large and mega-cap companies. The fund is currently invested about 18% in Canada and 18% in Japan. Other countries are below 13%. European countries have an aggregate weight of 54%. The next chart plots the top 10 countries, weighing about 90% of the portfolio. Hong Kong, which may represent a geopolitical and regulatory risk related to China, only has a 4% weight.
Country weights (Chart: author; data: Fidelity)
Financials are by far the heaviest sector in FIDI’s portfolio (25.4%), followed by energy (14.8%), materials (13.6%) and communication (11.5%). Other sectors are below 10% individually and 32% in aggregate.
Sector breakdown (Chart: author; data: Fidelity)
The next table compares FIDI’s aggregate valuation ratios with two of its closest competitors, both high-yield international equity ETFs: the Xtrackers MSCI EAFE High Dividend Yield Equity ETF ( HDEF ) and the iShares International Select Dividend ETF ( IDV ).
FIDI | HDEF | IDV | |
Price/earnings TTM | 9.53 | 8.97 | 5.34 |
Price/book | 1.25 | 1.38 | 0.97 |
Price/sales | 0.83 | 0.9 | 0.89 |
Price/cash flow | 5.97 | 6.04 | 4.71 |
FIDI and HDEF look similar in valuation, while IDV is significantly cheaper regarding these metrics.
The top 10 holdings, listed below, represent 25.7% of asset value. The heaviest ones weigh about 3%, so risks related to individual companies are quite low.
Name | Weight % | Primary listing ticker |
BP PLC | 3.04 | BP |
TotalEnergies SE | 3.02 | TTE |
Endesa SA | 2.77 | ELE |
Orange SA | 2.54 | ORA |
Enbridge Inc | 2.48 | ENB |
Repsol SA | 2.46 | REP |
Nintendo Co Ltd | 2.39 | 7974 |
Power Assets Holdings Ltd | 2.38 | 6 |
Enel SpA | 2.32 | ENEL |
Telefonica SA | 2.31 | TEF |
Historical performance
Since February 2018, FIDI, HDEF and IDV are in loss by 6% to 20% in total return (dividends included and reinvested). FIDI is the worst performer by a significant margin, and it also has the deepest drawdown. In the same period, the S&P 500 ( SPY ) has returned 43%.
Total Return | Annual Return | Drawdown | Sharpe ratio | Volatility | |
FIDI | -19.68% | -4.50% | -43.95% | -0.12 | 20.04% |
HDEF | -6.20% | -1.34% | -36.87% | -0.01 | 17.29% |
IDV | -11.36% | -2.50% | -41.64% | -0.02 | 20.47% |
SPY | 43.11% | 7.83% | -32.05% | 0.52 | 18.12% |
FIDI vs. 2 competitors since inception (Portfolio123)
In 2022, FIDI is almost on par with HDEF and beats IDV by 5 percentage points.
FIDI vs. 2 competitors in 2022 (Portfolio123)
Takeaway
FIDI is an international high-yield equity ETF holding about 100 stocks of large companies, mostly in Europe, Canada and Japan. Financials are the heaviest sector with 25% of asset value. Since its inception in 2018, FDI has underperformed two of its close competitors in the same asset category, HDEF and IDV. It also shows a deeper maximum drawdown. I don't expect it will perform better in a more complicated economic environment. For transparency, a dividend-oriented part of my equity investments is split between a passive ETF allocation (FIDI is not part of it) and my actively managed Stability portfolio (14 stocks), disclosed and updated in Quantitative Risk & Value.
For further details see:
FIDI: Lagging Its Peers In A Sinking Asset Class