A smart beta exchange traded fund, the iShares Core High Dividend ETF (HDV) debuted on 03/29/2011, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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 managed by Blackrock. HDV has been able to amass assets over $11.58 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 3.10%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For HDV, it has heaviest allocation in the Consumer Staples sector --about 24.7% of the portfolio --while Healthcare and Energy round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 9.16% of total assets, followed by Johnson & Johnson (JNJ) and Chevron Corp (CVX).
Its top 10 holdings account for approximately 53.54% of HDV's total assets under management.
Performance and Risk
So far this year, HDV return is roughly 10.82%, and was up about 3.92% in the last one year (as of 11/25/2025). During this past 52-week period, the fund has traded between $108.41 and $123.66.
HDV has a beta of 0.63 and standard deviation of 11.74% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 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) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $69.58 billion in assets, Vanguard Value ETF has $149.81 billion. SCHD has an expense ratio of 0.06% and VTV changes 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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iShares Core High Dividend ETF (HDV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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