Fidelity’s Focus on Active ETFs
Fidelity Investments is ramping up its dedication to the active ETF arena within its core Fundamental ETF equity suite. The recent launch of the Fidelity Fundamental Large Cap Value ETF (FFLV), with a fee of 38 basis points, marks an important addition to the firm’s lineup. This debut comes alongside the introduction of the Fidelity Low Duration Bond ETF (FLDB), boasting a competitive 0.20% expense ratio. These new active ETFs are part of Fidelity’s strategic move to expand its range of core asset allocation options.
Expanding Fundamental ETF Equity Suite
FFLV joins an array of three ETFs that have received enhancements, as per Fidelity Investments’ recent press release. Among these existing ETFs are the Fidelity Fundamental Large Cap Growth ETF (FFLG), the Fidelity Fundamental Large Cap Core ETF (FFLC), and the Fidelity Fundamental Small-Mid Cap ETF (FFSM). FFLG and FFLC are priced at 38 basis points, while FFSM stands at 43 basis points. The expansion of these offerings signifies a burgeoning interest in active ETFs within the Fidelity Investments sphere.
As part of integrating these strategies into the fundamental suite, adjustments such as expense reductions and management overhauls have been implemented to align with the suite’s distinctive approach.
Insights from Fidelity’s Head of ETF Management and Strategy
At the recent ETF Exchange conference, VettaFi connected with Greg Friedman, Head of ETF Management and Strategy at Fidelity, to delve into the suite’s strategic direction.
“We are steadfast in our commitment to leading the active ETF marketplace,” Friedman emphasized. “Our focus lies in adding substantial value to our clients and setting ourselves apart through our emphasis on smart beta and active strategies.”
Discussing Fidelity’s current agenda, Friedman elucidated, “We’ve mastered the satellites: factors, sectors, thematics, and even delved into Crypto. Our current emphasis is on fortifying the core aspects – how do we address our client’s fundamental investment necessities?”
While acknowledging the recent success of the Fidelity Wise Origin Bitcoin Fund, Friedman highlighted its distinctive role as an asset in the market landscape. “It represents a growing asset class that captures people’s attention. We respond to our clients’ interests, and this offering adds a crucial tool to their investment arsenal,” Friedman remarked.
Friedman’s primary focus at the conference was on the newly launched active smart beta suite. “It’s an exhilarating experience – combining the core convictions of seasoned Fidelity portfolio managers and integrating a quantitative overlay to rank these convictions. It’s a stimulating venture, constructing a fundamental core that was previously absent in our offerings,” he added.
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Important Disclosures
Additional Information for Semi-Transparent Active Equity ETFs
The actively managed ETF Tracking Basket serves to craft a stock portfolio along with representative index ETFs mirroring the daily performance of an actively managed ETF without revealing current holdings, trading tactics, or internal equity research. By concealing any undisclosed information about the underlying portfolio, the Tracking Basket solely employs the fund’s most recently disclosed holdings, representative ETFs, and publicly known daily performance for construction.
Insights into the Tracking Basket
While the Tracking Basket aims to furnish investors with ample data to enable an efficient arbitrage mechanism maintaining the Fund’s market price on par with or close to the underlying NAV per share, there exists a risk of market prices significantly varying from the Fund’s underlying NAV. Especially during moments of market disturbance or volatility, ETFs that trade based on a published Tracking Basket might encounter wider bid/ask spreads compared to those publishing their portfolios daily.
Even as the Fund gains from withholding its portfolio information, market players may try to exploit the Tracking Basket to decipher a fund’s trading tactics – successful discovery could lead to predatory trading behaviors that might harm the Fund and its shareholders. As shares are traded in the secondary market, brokers might levy a commission to execute a share transaction, translating to a cost involving the spread between a dealer’s buying and selling prices.
Fidelity Investments® operates independently of VettaFi. No legal partnership, agency affiliation, or similar relationship exists between VettaFi and Fidelity Investments. The content provided by VettaFi has not been prepared in conjunction with Fidelity Investments, which assumes no responsibility for its accuracy.
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Source: ETFTrends.com
The author’s views do not necessarily reflect those of Nasdaq, Inc.
