Fidelity International High Dividend ETF: A Short-Term Focus on High Dividend Stocks
Fidelity International High Dividend ETF (FIDI) is an exchange-traded fund (ETF) that concentrates on high dividend-yielding stocks from developed markets. This ETF employs a short-term selection methodology, which sets it apart from other high dividend ETFs, most notably iShares Select Dividend ETF (IDV).
FIDI’s 12-Month Yield-Based Approach
FIDI’s investment strategy is centered around selecting stocks with high dividend yields over the past 12 months. This approach aims to provide investors with a steady income stream. However, it comes at the cost of weaker dividend growth and total returns compared to other high dividend ETFs with longer evaluation periods.
Comparison with iShares Select Dividend ETF (IDV)
IDV, on the other hand, evaluates stocks based on their dividend yields over the past 3-5 years. This strategy results in a more balanced approach, offering both a steady income stream and the potential for capital appreciation. The comparison of the two ETFs’ performance is evident in their total returns since inception:
- FIDI: 18.8%
- IDV: 37.1%
The significant difference in total returns indicates that FIDI’s short-term focus on high dividend stocks has not yielded the same long-term performance as IDV’s more balanced strategy.
Impact on Individual Investors
For individual investors seeking a steady income stream, FIDI could be an attractive option. However, they should be aware of the potential for weaker dividend growth and lower total returns over the long term. Additionally, investors should consider their investment horizon and risk tolerance before choosing between FIDI and other high dividend ETFs.
Impact on the Global Economy
The performance of high dividend ETFs, like FIDI and IDV, can impact the global economy in several ways. Pension funds, insurance companies, and other institutional investors often use these ETFs to generate income and manage risk. A strong performance from high dividend ETFs can lead to increased investor confidence and a boost in economic growth. Conversely, poor performance could lead to reduced investor confidence and potential economic instability.
Conclusion
Fidelity International High Dividend ETF (FIDI) offers investors a short-term focus on high dividend stocks from developed markets. Its yield-based approach provides a steady income stream, but it comes at the cost of weaker dividend growth and total returns compared to other high dividend ETFs. Individual investors seeking a steady income stream should consider their investment horizon and risk tolerance before choosing between FIDI and other high dividend ETFs. The performance of high dividend ETFs, like FIDI, can also impact the global economy, influencing investor confidence and potential economic growth.
It is essential for investors to conduct thorough research and consider their investment goals and risk tolerance when choosing an ETF. The comparison of FIDI and IDV serves as a reminder that different investment strategies can yield varying results. By understanding the underlying investment methodologies and performance metrics, investors can make informed decisions and optimize their investment portfolios for their unique financial objectives.
