Fidelity Launches Multi-Factor ETF for Often-Overlooked MidCap Equities

Fidelity Investments, one of the industry’s leading providers of exchange traded funds (ETFs) with more than $380 billion in ETF assets under administration, today announced an expansion of its ETF lineup with the introduction of the Fidelity Small-Mid Factor ETF (FSMD).

FSMD will focus on mid-cap equities, which comparatively, are often overlooked relative to their large-cap brethren. Furthermore, mid-cap equities can also tune out some of the volatility experienced by their small-cap brethren.

Investors looking at large-cap stock positions may want more aggressive returns with better growth prospects without the inherent volatility of small cap stocks. Mid-caps strike this perfect balance of performance, diversity and safety.

FSMD offers investors competitive pricing with a total expense ratio of just 0.29%. FSMD will begin trading Thursday on the New York Stock Exchange and will be available to individual investors or financial advisors for purchase commission-free through Fidelity’s online brokerage platforms.

FSMD will apply Fidelity’s in-house quantitative analysis and proprietary risk management to seek differentiated sources of return to help drive better portfolio outcomes. FSMD applies Fidelity’s multifactor approach to both small and mid-cap stocks — a unique universe that has historically provided better exposure to the size factor than investing in only small-caps.

Investment Objectives and Index Definitions of FSMD:

  • Fidelity Small-Mid Factor ETF (FSMD) seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the Fidelity Small-Mid Factor Index.
  • The fund will normally invest at least 80% of its assets in securities included in the index. The Fidelity Small-Mid Factor Index is designed to reflect the performance of stocks of small- and mid-capitalization U.S. companies with attractive valuations, high quality profiles, positive momentum signals, and lower volatility than the broader market, as represented by Fidelity U.S. Extended Investable Market Index. T
  • his index is a subset of the Fidelity U.S. Total Investable Market Index, but excludes the 500 largest companies included in the broader index.

In addition to FSMD, Fidelity also launched the Fidelity Targeted International Factor ETF (FDEV) and Fidelity Targeted Emerging Markets Factor ETF (FDEM) for factor-based exposure overseas. FDEV and FDEM both leverage Fidelity’s unique multifactor methodology and also target securities least correlated with the performance of the S&P 500 at a competitive price.