Inside Fidelity's New Multi-Factor, Smart Beta ETFs | ETF Trends

Expanding on its line of smart beta strategies, Fidelity Investments launched three new multi-factor ETFs that combine various proven smart beta factors to help investors better diversify risk and potentially enhance returns.

On Thursday, Fidelity launched the Fidelity Small-Mid Factor ETF (NYSEArca: FSMD), Fidelity Targeted International Factor ETF (Cboe: FDEV) and Fidelity Targeted Emerging Markets Factor ETF (Cboe: FDEM), which come with a 0.29% expense ratio, 0.39% expense ratio and 0.45% expense ratio, respectively.

“We have leveraged years of experience in both quantitative and fundamental research to develop our unique approach in constructing our entire factor ETF suite, including these three new funds,” Greg Friedman, Fidelity’s head of ETF management and strategy, said in a note. “Our in-house quantitative analysis team conducts comprehensive factor research and leverages our active management processes to design ETFs with investor outcomes in mind.”

The new multi-factor ETFs employ Fidelity’s in-house quantitative analysis and proprietary risk management to seek differentiated sources of return to help improve portfolio outcomes. FDEV and FDEM both follow Fidelity’s unique multi-factor methodology and also target securities least correlated with the performance of the S&P 500. Meanwhile, the FSMD applies Fidelity’s multifactor approach to both small and mid-cap stocks.