FDLO tracks the Fidelity U.S. Low Volatility Factor Index, “which is designed to reflect the performance of stocks of large and mid-capitalization U.S. companies with lower volatility than the broader market. It may lend to earn income for the fund,” according to Fidelity.
At the sector level, FDLO is not your grandfathers low volatility ETF. Four sectors – consumer staples, healthcare, telecom and utilities – are considered defensive. However, FDLO’s overall exposure to those sectors relative to older low volatility ETFs is light. For example, utilities and telecom stocks combine for just 5.3% of FDLO’s weight. In some rival low volatility ETFs, utilities alone are 20% or more of the fund’s weight.
Where FDLO really breaks from its low volatility ETF brethren is with its technology exposure. FDLO’s largest sector weight is technology at almost 22%, an unheard of trait among many established low volatility funds.
FDLO allocates 28% of its combined weight to financial services and healthcare stocks. The ETF charges 0.29% per year, which is low among smart beta strategies. Fidelity clients can trade FDLO free of charge on the firm’s expansive commission-free ETF platform.
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