ETF Strategy for Rising Interest Rates

ETF Trends publisher Tom Lydon discussed the Fidelity Dividend ETF for Rising Rates (FDRR) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.

Many investors anticipate the Federal Reserve to continue with its tighter monetary policy, including three rate hikes this year.

FDRR is designed to reflect the performance of stocks of large and mid-capitalization, dividend-paying companies expected to pay and grow their dividends and have a positive correlation of returns to increasing 10-year U.S. Treasury yields.

It employs a multi-factor approach, including a 63% weight toward companies with higher dividend yields, and smaller 13.5% to avoid firms with payouts that are too high and might be cut in the future, 13.5% to those expected to grow dividends in the future and 10% to firms that perform better with rising rates.

Click here to listen to the podcast.