Fidelity Investments is expanding its reach into smart-beta exchange traded funds to help address investors’ growing desire for active styled strategies that come in an affordable and efficient ETF wrapper.
Fidelity plans to launch six new factor-based, smart-beta ETFs on or about Thursday, September 15, including the Fidelity Core Dividend ETF (FDVV), Fidelity Dividend ETF for Rising Rates (FDRR), Fidelity Low Volatility Factor ETF (FDLO), Fidelity Momentum Factor ETF (FDMO), Fidelity Quality Factor ETF (FQAL) and Fidelity Value Factor ETF (FVAL).
“The new factor ETFs are active by design, passive by implementation,” Anthony Rochte, president of SelectCo, the company’s dedicated sector investing and ETF services division, told ETF Trends at the Morningstar ETF conference in Chicago.
Fidelity services over 25 million investors on its brokerage account. These products were designed to cater toward these investors’ growing desire for targeted investment strategies that implement popular actively managed styles.
“The ETFs are based on academically sound factors that have delivered over time,” Joe Desantis, chief investment officer in Fidelity’s Equity division, told ETF Trends.
The factor-based ETFs also incorporate Fidelity’s proven research capabilities and experience in a passive, index-based fund wrapper.
“For nearly a decade, Fidelity’s quantitative research team has been working collaboratively with our portfolio managers and fundamental analysts to develop factor models that incorporate what we believe are the best stock drivers from both fundamental and quantitative perspectives,” Desantis said. “We are now making this expertise available directly to our customers through our new ETFs.”
Fidelity’s new group of smart-beta ETFs will each target a specific factor to help bolster a portfolios risk-adjusted returns.
“We think the factors can enhance portfolio returns and protect on the downside,” Desantis said.