Federated Hermes has unveiled its first equity ETF, an actively managed fund investing in US companies offering sustainable dividends.

The ETF targets higher-yielding companies that are expected to be able to sustain or grow their dividends.

The Federated Hermes US Strategic Dividend ETF (FDV US) has been listed on NYSE Arca with an expense ratio of 0.50%.

The fund is led by Daniel Peris, Head of Federated Hermes’ Strategic Value Dividend Group, with support from portfolio managers Deborah Bickerstaff, Jared Hoff, and Michael Tucker. Collectively, the team manages more than $30 billion in dividend-paying equity strategies.

The ETF seeks income and long-term capital appreciation by selecting 40 to 60 US-listed large and mid-cap companies that are offering yields above the average yield of the S&P 500.

The strategy, which Federated Hermes has offered since 2001, seeks out firms that are perceived to have the ability to sustain or grow their dividends. The approach aims to identify companies that have low share price volatility, are in a strong financial condition, and have demonstrated resilience through business and economic cycles.

John B. Fisher, President and CEO of Federated Advisory Companies, said: “High dividend-paying stocks have the potential for lower downside risk in challenging markets. In the current inflationary environment, the US Strategic Dividend ETF provides an option for investors seeking lower volatility than the broader market. The new ETF extends our highly sought dividend income offerings to new clients while broadening available offerings to existing clients.”

FDV marks Federated Hermes’ third ETF product following the December 2021 introduction of two actively managed short-duration fixed income products.