Fidelity Investments is making changes to its active high yield ETF, effectively lowering costs for investors.
The fund’s name changed from The Fidelity High Yield Factor ETF to the Fidelity Enhanced High Yield ETF on Oct. 10. The ticker – FDHY – remains the same.
Additionally, the fund’s total expense ratio was decreased from 45 basis points to 35 basis points, effective Oct. 1. With the new expense ratio, ETF shareholders will save an estimated $331K annually, based on AUM as of July 31, according to the firm.
FDHY’s new name better reflects the fund’s active investment strategy based on quantitative management.
See more: “Fidelity Offers Core Equity Exposure with Active Benefits”
While the fund’s name and expense ratio is changing, the methodology underpinning the active high yield ETF remains the same.
FDHY seeks a high level of income and capital appreciation. The fund uses a quantitative, rules-based approach to exploit market inefficiencies. The model underpinning FDHY systematically screens for bonds with high return potential and low default probability. It does this using a value- and quality-based methodology.
High yield strategies offer significant upside potential, particularly those with experienced active managers. A passive strategy that simply tracks an index of high yield bonds might miss key information, whereas an active strategy like FDHY can further analyze and assess each opportunity.
Fidelity’s Enhanced ETFs Beyond Its Active High Yield ETF
Fidelity’s equity Enhanced ETFs are also actively managed. These use a rules-based quantitative model and are engineered to provide core equity exposure. The funds seek to produce consistent returns above their benchmarks while utilizing a systematic investment process.
Funds in the Enhanced ETF suite include the Fidelity Enhanced Large Cap Core ETF (FELG), the Fidelity Enhanced Large Cap Value ETF (FELV), and the Fidelity Enhanced Mid Cap ETF (FMDE), among others.
For more news, information, and strategy, visit the ETF Investing Channel.
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.
1169521.1.0