Fidelity's Dividend ETF Stands Out as Rates Rise: A Correlation-Driven Play

Mid-February 2026 has drawn renewed attention to the Fidelity Dividend ETF for Rising Rates (FDRR). In a environment marked by nimble and unpredictable interest-rate moves, investors are increasingly seeking income sources that can weather higher bond yields. The question on many minds is how well the fund?s distinctive correlation-based approach performs in today?s market.

• Core strategy: emphasize dividend growth in a rising US-rate backdrop
• Expenses: annualized total expense ratio of 0.15%
• Portfolio tilt: substantial allocations to technology and financial shares

Focus on Yield Correlation

Unlike traditional dividend ETFs, FDRR selects its holdings using a specific criterion: each constituent must exhibit a positive correlation with the return on the 10-year U.S. Treasury. The objective is to deliver price stability or even gains when rising interest rates weigh on other market segments. The fund targets large- and mid-cap companies that are believed to be capable of sustainably increasing their cash dividends over time.

With an expense ratio of 0.15%, the ETF sits competitively in the strategic-beta segment. Compared with strategies that chase only high dividend yields, this fund weights interest-rate sensitivity and dividend growth more heavily.

Sectors and Macro Factors

At present, technology stocks form the backbone of the portfolio, supplemented by positions in financials, communication services, and healthcare. This sector mix means performance will be influenced not just by movements in interest rates but also by the dividend policies of major tech firms.