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.
Specifically, the Fidelity Small-Mid Factor ETF tries to reflect the performance of the Fidelity Small-Mid Factor Index, which 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, according to the fund’s prospectus.
The Fidelity Targeted International Factor ETF tries to reflect the performance of the Fidelity Targeted International Factor Index, which is designed to reflect the performance of stocks of large- and mid-capitalization developed international companies that have attractive valuations, high quality profiles, positive momentum signals, lower volatility than the broader developed international equity market and lower correlation to the U.S. equity market.
Lastly, the Fidelity Targeted Emerging Markets Factor ETF tries to reflect the performance of the Fidelity Targeted Emerging Markets Factor Index, which is designed to reflect the performance of stocks of large- and mid-capitalization emerging markets companies that have attractive valuations, high quality profiles, positive momentum signals, lower volatility than the broader emerging markets equity market and lower correlation to the U.S. equity market.
For more information on new fund products, visit our new ETFs category.