Fidelity lists distributing share classes for European and EM quality income ETFs

Sep 11th, 2019 | By | Category: Equities

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Fidelity International has introduced new share classes for two of its smart beta ETFs listed on London Stock Exchange and Xetra.

Fidelity International ETFs

Investors can now gain access to Fidelity’s European and emerging markets quality income ETFs through distributing share classes.

The funds provide exposure to high-quality companies with attractive dividend yields within the European and emerging markets universes.

The new share classes distribute income to investors on a quarterly basis. The existing share classes capitalize income.

Each ETF is linked to a proprietary Fidelity-branded strategy index that targets stocks that have historically demonstrated good profitability, strong cash-flows, and consistent dividends.

The underlying strategies seek to deliver a yield in excess of the broader market while concurrently managing risk.

Europe

The Fidelity Europe Quality Income UCITS ETF tracks the Fidelity Europe Quality Income Index.

Based on a starting universe of the largest Europe-listed stocks, the methodology initially excludes any security with no dividend yield, an excessively high payout ratio, or negative five-year dividend growth.

Constituents are then evaluated according to quality factors with each security receiving a composite score based on an equal-weighted combination of their z-scores across three factors (cash flow margin, return on invested capital, and free cash flow stability). The bottom half of the ranked securities are subsequently excluded.

The remaining constituents are then assigned a size-adjusted dividend composite score by multiplying their trailing 12-month dividend yield by company size. The highest-ranked stocks are selected for final inclusion with the methodology allowing for country, sector, and stock diversification by employing a sector/size-adjusted market cap weighting scheme.

The ETF comes with an expense ratio of 0.30%.

The new distributing share class is available on LSE in pound sterling (FEUI LN) and on Xetra in euros (FEUI GY).

Emerging markets

The Fidelity Emerging Markets Quality Income UCITS ETF tracks the Fidelity Emerging Markets Quality Income Index. It follows a similar methodology as described above but uses a starting universe of the largest stocks listed across emerging markets.

The ETF comes with an expense ratio of 0.50%.

The new distributing share class is available on LSE in pound sterling (FEMD LN) or US dollars (FEME LN) and on Xetra in euros (FYEQ GY).

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