Federated Hermes U.S. Strategic Dividend ETF (FDV)
ARCA ARCA Primary 
FDV: Low Beta To Detract From Returns, Outperformance Unlikely To Last
Federated Hermes US Strategic Dividend ETF is an actively managed ETF targeting "high dividend-paying U.S. stocks with dividend growth potential." I maintain a Hold rating on FDV, as I expect its YTD edge over IVV to dissipate in the coming months. I currently favor GARP and quality factors and remain cautious about low volatility and value, and FDV is heavy in the latter two, which will restrain upside capture.
FDV: Moderate Earnings Growth Key To This Active Dividend ETF's Success (Rating Upgrade)
FDV is an actively managed large-cap dividend ETF comprised of about 50 U.S. securities. Its net expense ratio is 0.50% and the fund has $612M in assets under management. Underpinning the strategy is the belief that high-dividend stocks will outperform the market with less volatility over the long run. Managers cite research over the last 50 years as support. While FDV has struggled to keep up with similar-yielding peers since its November 2022 launch, a material improvement in its portfolio-level earnings growth rate is a reason to be optimistic.
FDV: Active Dividend ETF With Performance Restrained By Low Beta
With its 2.9% dividend yield, actively managed FDV offers healthy factor exposures, but its focus on low beta has led to its inability to keep pace with the S&P 500. SCHD remains a superior alternative thanks to its stronger factor profile, higher dividend yield, and lower expenses compared to FDV. While FDV has some merits and deserves investor attention, I see little justification for a rating other than Hold.
Brandon Clark Discusses Value Strategies & More at Exchange
At VettaFi's recent Exchange conference, asset managers and experts from around the country gathered to share their knowledge on portfolio construction. Brandon Clark, Federated Hermes senior vice president and director of the ETF business, sat down with the VettaFi team to discuss the firm's investment philosophy, the advantages of active management, and much more.
FDV: Never Forget Low Beta Is A Double-Edged Sword
FDV has an active strategy at the intersection of the dividend, quality, and low volatility factors. It is benchmarked against the S&P 500. Large exposure to utilities and low beta have somewhat protected it from deep losses this year. Nevertheless, its longer-term performance is underwhelming, as it meaningfully underperformed IVV. Its current factor mix is heavy in quality and value, but SCHD is better in multiple aspects.
FDV: An Active Approach To Dividend Growers
The Federated Hermes U.S. Strategic Dividend ETF aims to generate income and long-term capital value by investing in high-dividend U.S. stocks with the potential for payout growth. The fund's sector allocation favors defensive sectors like utilities and consumer staples, offering stability and income protection against market downturns. Active management allows FDV to outperform passive dividend ETFs, focusing on both current income and future income growth, despite a higher expense ratio.
Federated Hermes Debuts 4 New Active Quantitative ETFs
As active ETFs continue to mature, more and more firms are entering the space with renewed vigor. Active strategies offer real advantages as a “plus” option on top of a core, passive allocation, while also providing a landing spot for many investors' active mutual fund assets.
FDV: Avoid This 3.63% Yielding Active Dividend Growth ETF
FDV is an actively-managed dividend fund, emphasizing low-volatile stocks with strong dividend growth potential. Its AUM is $104 million and its expense ratio is 0.50% after waivers. Its 3.63% expected yield is somewhat attractive, but at least 16 others pay more, with most delivering much better total returns. FDV has barely broken even since November 2022. FDV's managers operate with high conviction but to the detriment of shareholders. Like before, they continue to ignore quality, growth, and sentiment indicators.
