Making its debut on 03/29/2011, smart beta exchange traded fund iShares Core High Dividend ETF (HDV) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $10.94 billion, which makes 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 3.55%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 22.30% of the portfolio --while Energy and Healthcare round out the top three.
Looking at individual holdings, Exxon Mobil Corp (XOM) accounts for about 7.76% of total assets, followed by Johnson & Johnson (JNJ) and Progressive Corp (PGR).
The top 10 holdings account for about 48.62% of total assets under management.
Performance and Risk
So far this year, HDV has added about 2.91%, and was up about 7.44% in the last one year (as of 05/23/2025). During this past 52-week period, the fund has traded between $106.73 and $121.28.
The fund has a beta of 0.65 and standard deviation of 13.61% 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) 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 $67.67 billion in assets, Vanguard Value ETF has $132.07 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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iShares Core High Dividend ETF (HDV): ETF Research Reports Johnson & Johnson (JNJ): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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