Fidelity International High Dividend ETF

FIDI

Market cap $175M

Fidelity International High Dividend ETF is rated a Hold due to higher risk, lower yield, and higher costs than competitors like LVHI. The fund's portfolio is more concentrated in cyclical sectors and specific countries, increasing volatility and exposure to economic/geopolitical shocks. Despite a lower turnover rate, FIDI's expense ratio (0.57%) and poor liquidity make it less attractive than LVHI, which offers better risk management.

Investors looking to not only grow their nest egg for retirement, but also generate significant (and hopefully growing) passive income streams to live off of in retirement, have a number of excellent options to choose from.

FIDI offers solid international dividend exposure with a unique methodology, but its long-term diversification benefits are limited in today's global markets. Yield and total return are competitive with US peers, but FIDI is outperformed by international alternatives like LVHI, which boasts better risk-reward and drawdown management. FIDI's portfolio construction is thoughtfully diversified by country and sector, though its yield and returns don't significantly outshine the competition.

For investors heavily weighted toward U.S. growth equities, international ETFs could be a useful diversification play for portfolios. Developed-market international equities, particularly in Europe, appear to have significant upside before reaching their long-term valuation levels relative to the S&P 500, according to recent research from Fidelity Investments.

When you're young, it makes sense to buy riskier growth stocks that have high potential upside.

As investors seek out attractive opportunities in the current market, international ETFs are gaining favor among many. Europe and other developed-market equities were the top-performing regions during the first quarter, with each benefiting from a weaker dollar.

Fidelity International High Dividend ETF focuses on high dividend stocks from developed markets but has a short-term selection methodology. FIDI's 12-month yield-based approach results in weaker dividend growth and total returns compared to IDV's 3-5 year evaluation period. FIDI's total return since inception is 18.8%, significantly lower than IDV's 37.1%, indicating inferior long-term performance.

Retail investors do not need to worry about picking individual stocks to ensure steady returns.

As advisors look to diversify client portfolios, international equity ETFs may be worth consideration. Diversification should be a key area of focus this year, amid an uncertain economic outlook and potential for uneven market returns after the policy changes implemented by the new administration.

For those looking to build a portfolio of income-producing assets that may allow one to live off of dividends in retirement (without having to sell much, if all, of one's invested shares), the following three Fidelity ETFs may be worth considering.