Fidelity® Dividend ETF for Rising Rates (FDRR)

Overview

The Fidelityu00ae Dividend ETF for Rising Rates (FDRR) focuses on companies that are expected to perform well in a rising interest rate environment. It seeks to invest in dividend-paying equities that have demonstrated the ability to increase their dividends over time and possess attractive valuations.

Reputation and Reliability

Fidelity Investments is a globally recognized financial services firm with a long-standing reputation for reliability, robust research capabilities, and a wide range of investment products and services for retail and institutional investors.

Management Expertise

Fidelity employs a team of experienced portfolio managers and research analysts with deep expertise in equity analysis, dividend investing, and macroeconomic trend identification, specifically focusing on factors that benefit companies during periods of rising interest rates.

Goal

To seek capital appreciation and current income, with a secondary objective of offering a diversified portfolio of dividend-paying equities positioned to benefit from a rising interest rate environment.

Investment Approach and Strategy

Strategy: The ETF does not track a specific index but employs a proprietary, actively managed investment strategy.

Composition The ETF primarily holds a diversified portfolio of US equities, with a specific focus on companies that are more resilient to or benefit from rising interest rates. This often includes companies in sectors like financials, energy, and materials, which may have pricing power or increased profitability as rates rise. Emphasis is placed on dividend-paying companies with a history of dividend growth and strong financial health.

Market Share: As of recent data, FDRR holds a modest but growing market share within the dividend equity ETF segment, particularly in the niche focused on rising rate environments.

Total Net Assets (AUM): 1838000000

Key Competitors

• WisdomTree U.S. Quality Dividend Growth Fund (DGRW)
• Vanguard Dividend Appreciation ETF (VIG)
• Schwab U.S. Dividend Equity ETF (SCHD)

Competitive Landscape

The dividend ETF landscape is highly competitive, with many established players offering broad dividend strategies. FDRR differentiates itself by specifically targeting companies poised to benefit from rising rates, a more specialized approach. Its advantages lie in its focused strategy and Fidelity's research capabilities. Disadvantages may include a smaller AUM compared to giants like VIG and SCHD, and the active management approach carries inherent management risk.

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Benchmark Comparison: While FDRR does not track a specific index, its performance is often compared against broad dividend-focused benchmarks. It has generally shown competitive performance, particularly in periods where its strategy is favored by market conditions.

Expense Ratio: 0.29

Average Trading Volume

The ETF exhibits moderate average daily trading volume, suggesting reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically tight, indicating efficient trading and minimal execution costs for typical investors.

Market Environment Factors

FDRR is influenced by macroeconomic factors such as inflation rates, central bank monetary policy (interest rate hikes or cuts), economic growth, and consumer spending. Sectors like financials and industrials often see shifts in performance based on these dynamics.

Growth Trajectory

FDRR has demonstrated steady growth in assets under management and has maintained its strategic focus on dividend-paying equities resilient to rising rates. Minor adjustments to holdings occur based on ongoing research and market outlook.

Competitive Edge

FDRR's primary competitive edge stems from its specialized investment strategy, which focuses on identifying dividend-paying companies positioned to thrive in a rising interest rate environment. This niche focus, backed by Fidelity's extensive research infrastructure and experienced portfolio management team, allows it to target a specific market segment that may be underserved by broader dividend ETFs. The active management approach enables nimble adjustments to capitalize on evolving economic conditions.

Volatility

The ETF's historical volatility is generally in line with broad equity market indices, with occasional deviations based on sector performance and interest rate sensitivity.

Market Risk

The ETF is subject to market risk, including interest rate risk (as rising rates can impact bond yields and company valuations), equity risk (volatility of stock prices), dividend risk (companies may cut or suspend dividends), and sector-specific risks associated with its underlying holdings.

Ideal Investor Profile

The ideal investor for FDRR is one who anticipates or is experiencing a rising interest rate environment and seeks income and capital appreciation from dividend-paying stocks. Investors should have a moderate risk tolerance and a long-term investment horizon.

Market Risk

FDRR is generally suitable for long-term investors who are looking to add diversification to their portfolio with a focus on dividend growth and protection against rising interest rates. It can also appeal to those seeking a tactical approach to income generation.

The Fidelityu00ae Dividend ETF for Rising Rates (FDRR) offers a specialized approach to dividend investing, targeting companies designed to perform well in an environment of increasing interest rates. Backed by Fidelity's robust research and management, it provides income and capital appreciation potential. While facing competition, its focused strategy and active management offer a distinct advantage for investors navigating specific economic conditions. Its moderate liquidity and established expense ratio make it a viable option for suitable long-term portfolios.

Data Sources:

• Fidelity Investments Official Website
• Financial Data Aggregators (e.g., Morningstar, ETF.com)

Disclaimers:

The information provided is for informational purposes only and does not constitute financial advice. Investment decisions should be made based on individual financial circumstances and consultation with a qualified financial advisor. Past performance is not indicative of future results. ETF data is subject to change and may not be entirely up-to-date.