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Fidelity, best known for its mutual funds and managing your old 401(k) from your first job, has recently expanded its offerings with a selection of fresh ETFs.
From baskets of blue chips to volatility fighters, global clean energy funds to women’s empowerment, these ETFs range from the familiar to the progressive.
But which are worth considering? And what makes Fidelity’s new ETFs stand out in a crowded market?
Let’s dive into Fidelity’s (relatively) new ETFs.
Should You Consider Fidelity ETFs?
At first glance, Fidelity’s ETFs may seem to fit a mold; there’s a blue chip ETF, a bond market ETF, and many other usual suspects that would come from a large financial services firm.
But dig a layer deeper, and you’ll find that many Fidelity ETFs have characteristics that savvy investors may not appreciate, including:
- High expense ratios — Fidelity’s ETFs carry an average expense ratio of 0.38%. To anyone familiar with ETF trading, that sounds pretty dang high. After all, the industry average for ETFs is just around 0.16%, and Fidelity’s rival Vanguard charges as little as 0.03%. Kinda makes you wonder if Fidelity is actively managing their ETFs — and they are.
- Active management — Fidelity actively manages most of its ETFs in defiance of tradition. It calls them Fidelity Active ETFs and concedes that their hands-on style may or may not be good for your bottom line. “While Active ETFs offer the potential to outperform an index,” they write, “these products may more significantly trail an index as compared with passive ETFs.” So if you feel that 98% of ETFs are passively managed for a reason, a Fidelity ETF may not be a fit.
- Non-transparency — Finally, Fidelity’s new fleet of ETFs only reveal their holdings quarterly instead of daily. This isn’t uncommon for actively managed funds; Fidelity asserts that it protects its strategy, prevents copycats, and protects the overall integrity of the fund. The net result, in theory, is increased investor confidence.
Are you wanting to passively invest in a benchmark index? If so, you’ll want to look at Fidelity’s mutual funds instead, many of which have 0% expense ratios.
Fidelity’s ETFs, on the other hand, are geared towards investors who prefer active strategies and don’t mind paying more in fees for the opportunity (but certainly not the guarantee) to outperform the overall market. If that sounds like you, here are some of the most popular Fidelity ETFs available today.
Read more >>> Actively Managed vs. Passively Managed Funds
Overview of the Best Fidelity ETFs
|Fidelity ETF||Ticker||Best For|
|Fidelity Blue Chip Value ETF||(FBCV)||High cap/overall|
|Fidelity Total Bond ETF||(FBND)||Fixed income|
|Fidelity Low Volatility Factor ETF||(FDLO)||Riding out 2023 market volatility|
|Fidelity Clean Energy ETF||(FRNW)||The “E” your ESG portfolio|
|Fidelity Women’s Leadership ETF||(FDWM)||The “S” and “G” in your ESG portfolio|
1. Fidelity Blue Chip Value ETF (FBCV)
- Current price: 28.04
- Expense ratio: 0.59%
- 52-week range: 24.97 – 30.37
- Total assets under management: 104.26M
- Lifetime NAV return: +13.83
- Dividend Yield: 3.48%
- Holdings: 77
First up is the Fidelity Blue Chip Value ETF. As the name implies, it’s a big ol’ basket of blue chip stocks that Fidelity handpicked based on its in-house definition of a blue chip: strong earnings, stable cash flow, and an eccentric CEO who Tweets his way to the frontpage of Reddit at least once a month.
(Well, maybe one of those qualities is optional.)
The net result is a healthy, long-term growth ETF comprised of 77 familiar names: Comcast (CMCSA), JPMorgan Chase (JPM), and Warren Buffet’s own Berkshire Hathaway (BRK-B) all make an appearance in the top 10, creating a decent bedrock for sustained long-term growth. Judging by the presence of oil titans and scandal-ridden banks, it’s safe to say FBCV isn’t a top pick for the ESG-minded investor.
As for performance, FBCV experienced healthy growth early in the pandemic, eventually hitting a glass ceiling at the $30 mark. And as you can see, performance became erratic and trended downward when the Fed first raised interest rates in March.
But considering its bespoke purpose of long-term growth, this ETF could be a strong buy during a dip in 2023.
Read more >>> Top Long-Term Investment Strategies to Use in 2022
2. Fidelity Total Bond ETF (FBND)
- Current price: 44.08
- Expense ratio: 0.36%
- 52-week range: 43.25 – 53.57
- Total assets under management: 2.2B
- Lifetime NAV return: +1.41
- Dividend Yield: 2.82%
- Holdings: 2,038
Like many of its competitors, the Fidelity Total Bond ETF seeks to maximize current income, i.e. provide shareholders with above-average distributions.
The fund’s managers get there by poring over the Bloomberg U.S. Universal Bond Index to come up with an 80/20 mix: 80% boring-but-safe stuff like Treasury Bonds and investment-grade corporate bonds and 20% lower-quality debt securities.
The “spice” helps to lend a decent dividend yield (and higher current income) for shareholders without asking them to inherit more risk than the index it’s loosely based on.
Compared to its chief rival, the Vanguard Total Bond Market ETF (BND), FBND has 80% fewer holdings (~2k vs ~10k) and a much higher expense ratio (0.36% vs. 0.03%). But if you place more faith in Treasury-backed assets and domestic corporate bonds over the greater global market, FBND might be the better choice.
3. Fidelity Low Volatility Factor ETF (FDLO)
- Current price: 44.92
- Expense ratio: 0.29%
- 52-week range: 41.37 – 52.72
- Total assets under management: 400.8M
- Lifetime NAV return: +10.65
- Dividend Yield: 1.30%
- Holdings: 129
The Fidelity Low Volatility Factor ETF seeks to emulate the performance of the Fidelity U.S. Low Volatility Factor Index, which tracks stocks that generally exhibit lower price fluctuations than the broader market.
In other words, FDLO is Fidelity’s own Buick Riviera. It won’t give you Ferrari-levels of performance, but at least you’ll get a smooth ride over the greater market’s many potholes. And with the road ahead in 2023 looking like a bonafide moonscape, a soft suspension might be more important than a face-peeling V8.
Top 10 holdings include blue chips that are especially blue chip-y, with rocksteady performance and cash flow. Microsoft (MSFT) alone makes up nearly 6% of the whole ETF, while Google aka Alphabet (GOOGL), Amazon (AMZN), UnitedHealth Group (UNH), and Johnson & Johnson (JNJ) collectively make up the top five, or nearly 17%.
It’s a testament to the ETF’s design that it’s “only” down ~10% this year compared to 30% for the Dow Jones and 60% for Bitcoin. And considering the bond market isn’t the inflation hedge it once was, conservative investors might see FDLO as a relatively safe place to park some cash until the overall market recovers.
4. Fidelity Clean Energy ETF (FRNW)
- Current price: 20.82
- Expense ratio: 0.39%
- 52-week range: 18.62 – 29.51
- Total assets under management: 5.0M
- Lifetime NAV return: -15.80
- Dividend Yield: N/A
- Holdings: 62
The Fidelity Clean Energy ETF is a big basket of 62 foreign and domestic tech companies fighting the good fight against climate change. At least 80% of the assets come from the Fidelity Clean Energy Index, which is wholly focused on solar, wind, hydrogen, and other renewable energy sources.
Unlike some competing funds, the Fidelity Clean Energy ETF isn’t just another thinly-veiled blue chip ETF wearing a “Save the Planet” t-shirt. While other ESG funds tend to follow a similar mold (Tesla, Microsoft, etc.) FRNW’s top holdings are companies you’ve probably never heard of.
California-based green energy giant Enphase Energy, Inc. (ENPH) takes the #1 spot at 4.45% while dueling Danish wind power companies Ørsted (DNNGY) and Vestas Wind Systems (VWDRY) make up the next two. And when you start seeing Chinese companies in the mix, it becomes clear that this is the rare green energy ETF that isn’t too obsessed with the U.S. domestic market.
Performance-wise, the fund hasn’t moved much since its inception date on October 8th, 2021. Like the rest of the market, it’s down a few points, but its diverse global holdings in a rapidly growing sector could spell steep profits in the long term.
5. Fidelity Women’s Leadership ETF (FDWM)
- Current price: $12.42
- Expense ratio: 0.59%
- 52-week range: 15.30 – 21.75
- Total assets under management: 2.3M
- Lifetime NAV return: -18.32
- Dividend Yield: 0.73%
- Holdings: 95
I firmly believe that every well-known financial services firm should come up with some sort of alternative, creative, and/or progressive ETF worth talking about. Not only do these ETFs spin up positive PR, but they call attention to corners of the market and ESG initiatives in a way that your garden variety midcap ETF doesn’t.
Case in point, the Fidelity Women’s Leadership ETF captures high-performing global companies prioritizing and advancing women’s development and leadership in the workplace. According to Fidelity’s prospectus, to qualify for the fund, a high-performing company must:
- Include a woman as a member of the senior management team;
- Be governed by a board for which women represent at least one-third of all directors; or
- In Fidelity’s opinion, they have adopted policies designed to attract, retain, and promote women.
Familiar companies within the top 10 holdings include Microsoft (MSFT), Apple (AAPL), Cigna (CI), Progressive (PGR), and Accenture (ACN). Dozens of female-led companies like Bumble (BMBL) and General Motors (GM) make an appearance further down.
Performance-wise, Fidelity’s new socially-conscious ETF hasn’t quite had a chance to prove itself. Having launched inside the cauldron of a mid-pandemic mini-recession, FDWM has been trending downwards ever since. But it’s hard to blame the fund managers’ selection philosophy when the market as a whole has been sliding off a cliff.
Instead, it’s best to zoom out from the lens of the next 12 months and see the bigger picture; regardless of short-term performance, the Fidelity Women’s Leadership ETF represents an excellent way to lend more S to your ESG portfolio.
As someone who values low fees, passive management, and high transparency, I personally feel that Fidelity’s selection of ETFs is lacking. But if you’re a fan of active management, Fidelity has a few unique ETFs that might be worth considering for your portfolio.
Learn more about ETFs: