Fidelity launches three multi-factor equity ETFs

Mar 1st, 2019 | By | Category: Equities

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Fidelity Investments has launched three new ETFs that provide exposure to US mid- and small-cap, international developed, and emerging market equities that have been selected using a multi-factor methodology.

Fidelity launches three multi-factor equity ETFs

All three ETFs are available commission-free through Fidelity’s online brokerage platforms.

The funds track proprietary in-house indices that favour firms with attractive valuations, high-quality profiles, positive price momentum, and lower volatility than the broader market.

Constituents which pass the selection phase are weighted by market capitalization.

“We have leveraged years of experience in both quantitative and fundamental research to develop our unique approach in constructing our entire factor ETF suite, including these three new funds,” said Greg Friedman, Fidelity’s Head of ETF Management and Strategy.

“Our in-house quantitative analysis team conducts comprehensive factor research and leverages our active management processes to design ETFs with investor outcomes in mind.”

The Fidelity Small-Mid Factor ETF (FSMD US) selects constituents from the universe of US-listed equities excluding the 500 largest companies. The fund has been listed on NYSE Arca and comes with an expense ratio of 0.29%.

The Fidelity Targeted International Factor ETF (FDEV US) and Fidelity Targeted Emerging Markets Factor ETF (FDEM US) select constituents from the universes of large- and mid-cap stocks from developed ex-US and emerging markets, respectively. Additionally, to enhance diversification potential for US-focused portfolios, the funds target securities least correlated with the S&P 500 during security selection. FDEV and FDEM have both been listed on Cboe BZX Exchange and come with expense ratios of 0.39% and 0.45%.

All three ETFs are available commission-free through Fidelity’s online brokerage platforms.

“The three new factor ETFs are available commission-free and competitively priced below the industry average,” added Friedman. “When you combine the expense ratio with access to Fidelity’s research, tools, trade execution, and product offering, we believe there is no better value in the industry.”

Fidelity already offers a suite of ten factor-based ETFs in the US. These include five single-factor US equity funds (high dividend, low volatility, momentum, quality, and value), two international single-factor funds (high dividend and value), two fixed income factor funds, and a dividend ETF that picks stocks that are likely to outperform in an environment of rising interest rates.

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