Investment trends show a notable shift in ETF performance metrics, highlighting changing market dynamics. While the Schwab US Dividend Equity ETF (SCHD) has traditionally served as the benchmark for dividend-focused ETFs, investors are now turning to other funds for improved returns. Three such funds—Fidelity High Dividend ETF (FDVV), Amplify CWP Enhanced Dividend Income ETF (DIVO), and Avantis International Small Cap Value ETF (AVDV)—are gaining traction due to their attractive yields and growth prospects. This shift in focus reflects broader investment strategies targeting stability and higher yields.
Notable differences arise when considering the current performance of SCHD, which is down 2% year-to-date, contrasting starkly with its past performance where it maintained parity with the S&P 500. The Fidelity High Dividend ETF, up 12% year-to-date, stands in stark contrast by offering a considerable yield of 3.09%. Meanwhile, an active approach taken by Amplify CWP through its Enhanced Dividend Income ETF has shown to be competitive, with American Express (NYSE:AXP), RTX Corp, and Apple (NASDAQ:AAPL) forming significant components of its concentrated holdings.
What Defines Fidelity High Dividend ETF’s Appeal?
Fidelity High Dividend ETF attracts investors with its systematic approach of focusing on large-cap and mid-cap equities that regularly enhance their dividends. Its strategy includes screening from the largest 1,000 U.S. and developed international stocks by market cap. This strategic selection ensures a robust portfolio comprising 121 holdings, focused on sectors that promise sustainable growth and higher yields.
How Does Amplify CWP Enhanced Dividend Income ETF Stand Out?
DIVO distinguishes itself with an active management approach and concentrated selection of 36 blue-chip U.S. stocks. The ETF employs a tactical covered-call strategy, enhancing returns through option premiums. This results in a moderate yield of 4.53%, appealing to investors who seek reliable income without the risks associated with high-yield investments.
The Avantis International Small Cap Value ETF presents another intriguing option, with a significant rise of 37.3% year-to-date. By providing exposure to diverse small-cap stocks in international markets outside the U.S., it acts as a counterbalance to U.S. market trends. Lower valuations abroad, coupled with favorable exchange rate movements, have propelled its appeal.
In decision-making, investors must weigh the advantages of international diversification given current global economic conditions and market valuations. Avantis responds to these conditions through its active management style that seeks out opportunities beyond U.S. borders.
Investors seeking to navigate these shifts must consider the potential offered by ETFs like DIVO and AVDV. AVDV’s impressive performance may be attributed to its focus on small-cap sectors internationally and its efficient management aimed at optimizing gains with controlled costs. Simultaneously, DIVO’s innovative covered-call strategy showcases an alternative route for stabilizing income in volatile markets.
In summary, this evolving landscape of dividend ETFs may continue to challenge traditionally popular funds like SCHD. Investors are likely to remain attentive to emerging strategies that balance yield with growth potential, impacting overall investment strategies.
