July brought with it a market rotation mid-month as investors pivoted from large-cap to small-cap stocks. Investors looking to hone their existing large-cap portfolio with an actively managed strategy may consider the Fidelity Fundamental Large Cap Core ETF (FFLC).
In a changing market regime, active management may prove beneficial for investors. An active strategy that looks across investment styles may provide more dynamic exposure to large-cap stocks than investing in a large-cap index.
Total returns YTD as of 07/23/24.
The Fidelity Fundamental Large Cap Core ETF (FFLC) seeks long-term growth of capital. The fund is actively managed and fully transparent. FFLC invests primarily in large-cap companies, defined as those with similar market capitalizations as constituents of the S&P 500 Index or Russell 1000 Index.
High-Conviction, Actively Managed Large-Cap Exposure
The fund’s advisors invest across styles that may include growth, value, or a combination of the two. The fund may also invest in mid- and small-cap companies. When investing, the fund uses a hybrid fundamental and systematic strategy.
“The investment process applies a quantitative portfolio construction process that seeks to extract and combine the highest conviction investment ideas from multiple Fidelity portfolio managers,” Fidelity explained in a Q&A earlier this year.
The insights gleaned from the PMs come from their expertise within an asset class, style, or market cap. Next, the strategy will then “optimize the portfolio to ensure style box consistency through a defined risk management process.”
The fund uses bottom-up analysis that includes a company’s earnings outlooks, financial health, industry position, management, etc. It also constructs the portfolio using a quantitative process to capture high-conviction stocks while taking into account liquidity, trading characteristics, and overall portfolio risk.
See also: “A Deep Dive Into Fidelity’s Fundamental ETF Suite”
FFLC limits the stocks it invests in to 60-150 companies. It balances sector weights alongside individual stock weights. The fund is part of Fidelity’s Fundamental ETF suite, which includes the Fidelity Fundamental Large Cap Growth ETF (FFLG), the Fidelity Fundamental Large Cap Value ETF (FFLV), and the Fidelity Fundamental Small-Mid Cap ETF (FFSM).
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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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