Fidelity® to Introduce Fundamental Active ETF Suite and Active Fixed Income ETF
New Products will Expand Fidelity Lineup to 66 ETFs
BOSTON, February 12, 2024--(BUSINESS WIRE)--Fidelity Investments® today announced the upcoming launch of two new active ETFs and updates to three existing equity ETFs, available commission-free for individual investors and financial advisors through Fidelity’s online brokerage platforms on February 26, 2024.
The equity ETFs will be offered as part of a new Fundamental ETF equity suite composed of updates to three existing ETFs, which have $489M in AUM as of Jan. 30, 2024, and the launch of one new active equity ETF, including:
Fidelity ® Fundamental Large Cap Growth ETF (FFLG);
Fidelity ® Fundamental Large Cap Core ETF (FFLC);
Fidelity ® Fundamental Small-Mid Cap ETF (FFSM); and
Fidelity ® Fundamental Large Cap Value ETF (FFLV), the new active equity ETF.
Fidelity will also launch a new active fixed income ETF, Fidelity ® Low Duration Bond ETF (FLDB).
"This launch builds on our legacy of active management through the ETF wrapper, as we continue to leverage both our fundamental approach along with quantitative construction techniques," said Greg Friedman, Fidelity’s Head of ETF Management and Strategy. "In listening to our customers and their evolving needs, we see the opportunity to provide exceptional value through new active equity and active fixed income offerings designed to serve as options for their portfolios’ core positions."
Fidelity Fundamental ETFs
The Fundamental ETF suite seeks to extract and combine high conviction investment ideas from multiple Fidelity portfolio managers, providing active equity exposure across market capitalizations and styles. Each ETF will employ a proprietary, disciplined investment process that seeks to outperform its benchmark by fundamentally evaluating factors such as financial condition, earnings outlook, strategy, management, industry position, and economic and market conditions. The investment process will also apply a quantitative portfolio construction process designed to emphasize securities in which the adviser has high conviction subject to appropriate security and portfolio-level risk, liquidity, and trading characteristics.
As part of the transition to the Fundamental suite, the ETFs will be competitively priced with expense reductions, name and ticker changes, and portfolio management updates to reflect the suite’s fundamental approach. The transitions provide access to Fidelity’s quantitative capabilities, including technology and decades of data and analysis. A new strategy, Fidelity Fundamental Large Cap Value ETF, will round out the suite. All of the Fundamental Large Cap ETFs will be fully transparent as of February 26, 2024.
Prior to February 26, 2024 | Effective February 26, 2024 | ||||
ETF and Ticker | Management Fee | Portfolio | ETF and Ticker | Management Fee | Portfolio |
Fidelity ® Growth Opportunities ETF (FGRO) | 59 bp | Kyle Weaver, Michael Kim | Fidelity ® Fundamental Large Cap Growth ETF (FFLG) | 38 bp | Tim Gannon, Michael Kim, Risteard Hogan |
Fidelity ® New Millennium ETF (FMIL) | 59 bp | Andy Browder, Daniel Sherwood | Fidelity ® Fundamental Large Cap Core ETF (FFLC) | 38 bp | Tim Gannon, Michael Kim, Camille Carlstrom |
Fidelity ® Small-Mid Cap Opportunities ETF (FSMO) | 60 bp | Tim Gannon, Michelle Hoerber | Fidelity ® Fundamental Small-Mid Cap ETF (FFSM) | 43 bp | Tim Gannon, Michelle Hoerber, Tom Hense |
New ETF | New ETF | New ETF | Fidelity ® Fundamental Large Cap Value ETF (FFLV) | 38 bp | Tim Gannon, Michael Kim, Tom Hense |
Fidelity Low Duration Bond ETF
To add to Fidelity’s $8.2B fixed income ETF lineup, Fidelity Low Duration Bond ETF (FLDB) will seek to obtain a high level of current income consistent with preservation of capital by normally investing at least 80% of assets in investment-grade debt securities of all types and repurchase agreements for those securities. FLDB will be competitively priced with an expense ratio of .20%. The portfolio management team will include long-tenured co-managers David DeBiase, Rob Galusza, and Julian Potenza.
"The launch of Fidelity Low Duration Bond ETF complements our robust fixed income offering to help meet client demand for longer duration solutions in the ultrashort bond category," continued Friedman.
Fidelity’s Growing ETF Platform
With these changes and additions, the Fidelity ETF lineup will consist of 66 products, including 22 actively managed equity ETFs, 13 fixed income ETFs, 13 equity factor ETFs, six passive thematic ETFs, 11 passive equity sector ETFs, and Fidelity ONEQ. Fidelity also recently launched Fidelity® Wise Origin® Bitcoin fund (FBTC), one of the industry's first spot bitcoin exchange-traded products (ETPs) that seeks to track the performance of bitcoin. The Fundamental ETF suite and Fidelity Low Duration Bond ETF will build on the $55 billion in assets under management of this total lineup.
As part of Fidelity's commitment to financial education, the company offers a variety of resources to help investors review ETF investing ideas, decide which types of ETFs may fit their investing needs, or browse ETFs with Fidelity’s screeners: https://www.fidelity.com/etfs/investing-in-etfs or https://institutional.fidelity.com/advisors/investment-solutions/performance/fidelity-etfs?tab=overview. As a leading provider of ETFs, Fidelity’s platform offers individual investors and advisors access to more than 2,500 ETFs, with more than $1.1 trillion in ETF client assets as of December 31, 2023.
About Fidelity Investments
Fidelity’s mission is to strengthen the financial well-being of our customers and deliver better outcomes for the clients and businesses we serve. Fidelity’s strength comes from the scale of our diversified, market-leading financial services businesses that serve individuals, families, employers, wealth management firms, and institutions. With assets under administration of $12.6 trillion, including discretionary assets of $4.9 trillion as of December 31, 2023, we focus on meeting the unique needs of a broad and growing customer base. Privately held for 77 years, Fidelity employs more than 74,000 associates across the United States, Ireland, and India. For more information about Fidelity Investments, visit https://www.fidelity.com/about-fidelity/our-company.
Free commission offer applies to online purchase of ETFs in a Fidelity retail account. The sale of ETFs is subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal).
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. The risks associated with the securities of companies that represent a disruptive theme include small or limited markets for such securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. The securities of companies that rely heavily on technology tend to be more volatile and rapid changes to technologies affecting a company's products may adversely affect such company's results. The funds may have additional volatility because of their narrow concentration in specific industries and the companies within their disruptive themes. Non-diversified funds that focus on a relatively small number of stocks tend to be more volatile than diversified funds and the market as a whole.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses.
High-yield/non-investment-grade bonds involve greater price volatility and risk of default than investment-grade bonds.
The Fidelity Small-Mid Cap Opportunities ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. These ETFs will not. This may create additional risks for your investment. For example, you may have to pay more money to trade the shares of these ETFs. These ETFs will provide less information to traders, who tend to charge more for trades when they have less information; the price you pay to buy ETF shares on an exchange may not match the value of each ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for these ETFs compared to other ETFs because they provide less information to traders; these additional risks may be even greater in bad or uncertain market conditions; each ETF will publish on Fidelity.com and i.Fidelity.com a "Tracking Basket" designed to help trading in shares of the ETF. While the Tracking Basket includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. The differences between these ETFs and other ETFs may also have some advantages. By keeping certain information about the ETFs secret, they may face less risk that other traders can predict or copy their investment strategy. This may improve the ETFs’ performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information regarding the unique attributes and risks of these ETFs, see section below.
Exchange-traded funds (ETFs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETFs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETFs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETF is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETF may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETF to another and losses may be magnified if no liquid market exists for the ETF's shares when attempting to sell them. Each ETF has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.
FBTC is for investors with a high risk tolerance. It invests in a single asset, bitcoin, which is highly volatile and can become illiquid at any time. FBTC is not a traditional ETF registered under the Investment Company Act of 1940. To learn more about Fidelity Wise Origin Bitcoin Fund, see the fund’s prospectus.
FBTC is not an investment company registered under the Investment Company Act of 1940 (the "1940 Act") and is not subject to regulation under the Commodity Exchange Act of 1936 (the "CEA"). As a result, shareholders of FBTC do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
Digital assets are highly volatile, and their market movements are very difficult to predict. Various market forces may impact their value including, but not limited to, supply and demand, investors' faith and their willingness to purchase it using traditional currencies, investors' expectations with respect to the rate of inflation, interest rates, currency exchange rates, an evolving legislative and regulatory environment in the U.S. and abroad, and other economic trends. Investors also face other risks, including significant and negative price swings, flash crashes, and fraud and cybersecurity risks. Digital assets may also be more susceptible to market manipulation than securities.
The performance of the Fund will not reflect the specific return an investor would realize if the investor actually purchased bitcoin. Investors in the Fund will not have any rights that bitcoin holders have and will not have the right to receive any redemption proceeds in bitcoin.
Fidelity, Fidelity Investments and the pyramid logo are registered service marks of FMR LLC. The third party trademarks appearing herein are the property of their respective owners.
Before investing in any exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.
Fidelity, Fidelity Investments and the pyramid logo are registered service marks of FMR LLC. The third-party trademarks appearing herein are the property of their respective owners.
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