Featured Fund Focus:
Fidelity Dividend ETF for Rising Rates (FDRR)

This month’s Fund Focus comes as concerns that the Federal Reserve may raise interest rates in September are elevated. Rising rates can often have a negative effect on bonds and stocks as well. So, I researched fund companies that target investing with rising rates as a backdrop. The Fidelity Dividend ETF for Rising Rates (FDRR) turned up.

This rules-based equity ETF is designed to provide exposure to dividend-paying stocks that have historically shown a positive correlation with rising 10-year U.S. Treasury yields. Launched on September 12, 2016, by Fidelity Investments, the fund seeks to track the Fidelity Dividend Index for Rising Rates.

The strategy targets large- and mid-capitalization companies expected to continue paying and growing their dividends. Stocks are selected and weighted based on factors including dividend yield, payout ratio, dividend growth, and their historical sensitivity to increasing long-term interest rates. This approach aims to offer better relative resilience during rising-rate environments compared with traditional high-dividend or bond-proxy strategies.

As of late August 2026, FDRR managed approximately $760 million in assets. It carries a low expense ratio of 0.15% and distributes dividends quarterly, with a trailing twelve-month yield around 2.0–2.2%. The portfolio typically holds about 125–130 stocks and maintains a heavy tilt toward technology and financials. Recent top holdings have included NVIDIA, Apple, Microsoft, Alphabet, Broadcom, and JPMorgan Chase, reflecting both growth-oriented dividend payers and more traditional value names.

Performance has generally been competitive within the large-value and equity-income categories. The fund has delivered solid multi-year returns, benefiting from its quality tilt and reduced exposure to rate-sensitive sectors such as utilities and real estate. While not immune to broader market declines, its construction has historically helped it hold up better than many pure dividend or growth strategies when yields rise.

FDRR appeals to investors seeking a dividend-oriented equity allocation with an explicit rising-rates overlay. It is not a pure defensive or high-yield vehicle, but rather a hybrid designed for environments in which higher interest rates pressure traditional bond proxies. As with any equity ETF, principal risk remains, and past performance does not guarantee future results. Investors should review the prospectus for full details on methodology, risks, and holdings.

To schedule a conversation about whether this fund or strategy is appropriate for your portfolio, please click here.

Sources :

https://seekingalpha.com/article/4855259-fdrr-okay-to-hold-even-if-you-think-rates-move-lower-in-2026

https://www.fool.com/investing/2026/06/23/fed-tighten-ahead-dividend-etf-fdrr-protect/

https://portfolioslab.com/symbol/FDRR

https://www.morningstar.com/etfs/arcx/fdrr/quote

Hot Topics in the Month of August

August 2026 was a stocks-up, bonds-stressed, oil-jittery month. August was a bull market with a hawkish Fed, a shooting war in the oil patch, and a bond market that no longer believes governments can borrow for free. Stocks can keep making highs; the argument is whether AI earnings and energy cash flows are enough to offset sticky inflation and $40T of U.S. debt.

1. Fed Chair Warsh goes hawkish at Jackson Hole

The month’s biggest market-moving speech. New Fed Chair Kevin Warsh told Jackson Hole that summer CPI/PCE prints were better than feared, but underlying inflation has not meaningfully improved. PCE is still 3.7%, core 3.3%. Policy rate sits at 3.50–3.75%.

2. Iran war, Hormuz, and $90 oil

The U.S.–Iran conflict (started Feb 28) is still the global energy story. Iran has used the Strait of Hormuz as leverage; tanker traffic recovered to roughly two-thirds of pre-war levels, but prices stay jumpy.

• WTI spent much of the month in the low-to-mid $80s, Brent near $90
• Oil touched $90+ on Hormuz stalemate; Brent hit ~$94 after Trump threatened retaliation
• Late-month U.S. strikes and talk of hitting Iran’s Kharg Island oil hub sent futures higher again
• Gasoline ~$4.11/gal; corn and wheat hit 3-year highs

3. Stocks at records — on a narrow AI/energy tape

The S&P 500 crossed 7,700 for the first time (Aug 4), then printed a record close near 7,799. That’s the 25th all-time high of 2026. Nasdaq ~26,500, Dow ~53,500.

The catch, from Schwab and others: earnings are real (analysts now see ~25% S&P EPS growth this year), but leadership is concentrated in AI and energy. Household equity exposure is at record levels; consumer sentiment outside the stock market is historically weak.

4. Nvidia's $96 billion quarter
The AI trade's stress test. Nvidia reported $96.2B revenue (up ~106% YoY), EPS $2.22 vs ~$2.09 expected. Data-center revenue more than doubled to $89B. Q3 guide: ~$108B.

5. Bond revolt: $40T U.S. debt, France as Europe's problem child
Fixed income was the month's real stress point.

Treasury Secretary Scott Bessent doubled long-end buybacks (to at least $4B per operation) to cap yields. The rally faded in hours; critics called it a “drop in the bucket.” France’s interest bill is up 19% YoY, debt ~118% of GDP, and 2027 elections make austerity politically toxic.

6. Deals, IPOs, and household money

• Aon ~$17B for USI from KKR — one of the year’s biggest insurance deals, announced over the Aug 30–31 weekend. WSJ
• SpaceX (SPCX) reclaimed its $135 IPO price after a brutal post-IPO slide from a $225 peak down to ~$108. CNBC
• Mortgages stuck around 6.5%+ as long yields stayed high
• High-yield savings still ~4.15% APY
• Consumer confidence slipped again (Conference Board 89.4); “middle-class affordability” and “how many American millionaires” were the viral personal-finance pieces. Yahoo: You’re not middle class unless…

A Look Across the Market

August 2026 Market Snapshot

Stocks rebounded in August as strong tech earnings drove a sector recovery, while the 30 year Treasury touched 5.33 percent, its highest level since 2007, on renewed fiscal and rate concerns. The S&P 500 grew earnings about 50 percent year over year for Q2, with over 85 percent of names beating on the bottom line.

Contact Don

Don Williams, CMFC®, CRPC®

Financial Advisor/Partner

(813) 328-8278
dwilliams@primefinancial.com

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