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Fidelity's ETF Strategy in Focus After Zero-Fee Funds

Neena Mishra
U.S. monthly inflation came in at the highest in nine months in October. This puts TIPS ETFs in focus.


In this episode of ETF Spotlight, I talked with Paul Baiocchi, VP, ETF Business Development at Fidelity.

Fidelity has been giving tough competition to Vanguard-- the earlier low-cost leader in the ETF and mutual fund space.  The investing giant recently launched four zero fee index funds. They offer a full lineup of low-cost sector ETFs, factor-based ETFs, fixed income ETFs, and Fidelity ONEQ, which follows the NASDAQ Composite Index.

Fidelity’s sector ETFs are among the cheapest in the industry. The firm also has 265 ETFs available for commission free trading on its platform. It recently announced that it would trade bitcoin for hedge funds and other professional investors.

To start off, Paul gave us an overview of Fidelity’s ETF strategy.

Recent fund flows clearly show that investors are becoming more cost conscious and moving their dollars to the cheapest ETFs. Should they base their investing decision on fees alone? Are there other costs to be considered?

We talked about what’s happening in the market. Some of the earlier high flyers have been beaten down amid worries about earnings, trade tensions and looming midterm elections. What do fund flows on Fidelity’s platform tell us about major trends?

We then discussed rising interest in factor investing and how Fidelity Low Volatility Factor ETF (FDLO) Fidelity Momentum Factor ETF (FDMO) and Fidelity Value Factor ETF (FVAL) should be used in a portfolio. Growth and momentum ETFs were punished in the past few weeks and value ETFs, which were shunned by investors earlier, appear to be gaining some favor.

Earlier this year, Fidelity launched two international smart beta ETFs--Fidelity International High Dividend ETF (FIDI) and Fidelity International Value Factor ETF (FIVA). What do investors need to know about these ETFs?

The Fidelity Low Duration Bond ETF (FLDR) seeks a balance between credit risk and interest-rate risk, while pursuing higher income potential than a money market with lower volatility than a short-term bond fund. It is an interesting choice for investors looking for income in a rising interest rates environment.

Please visit fidelity.com to learn more about these ETFs and other Fidelity products.  Make sure to tune in for our next podcast. If you have any comments or question, please email podcast@zacks.com.

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FID-VAL FACTOR (FVAL): ETF Research Reports
FID-MOM FACTOR (FDMO): ETF Research Reports
FID-LV FACTOR (FDLO): ETF Research Reports
FIDLTY-LW DUR B (FLDR): ETF Research Reports
FID-INTL VL FAC (FIVA): ETF Research Reports
FID-INTL HDIV (FIDI): ETF Research Reports
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