Fidelity Adds Multifactor ETFs

February 28, 2019

Today Fidelity rolled out three ETFs on two different exchanges. The three funds all track in-house multifactor indexes targeting the value, quality, momentum and low-volatility factors.

The three funds, their tickers and expense ratios are as follows:

  • Fidelity Targeted Emerging Markets Factor ETF (FDEM), 0.45%
  • Fidelity Targeted International Factor ETF (FDEV), 0.39%
  • Fidelity Small-Mid Factor ETF (FSMD), 0.29%

FDEM and FDEV both list on Cboe Global Markets (parent company of ETF.com), while FSMD lists on the NYSE Arca exchange.

Methodology

Fidelity is primarily focused on the smart-beta and active spaces for its ETFs, according to Greg Friedman, Fidelity’s head of ETF management and strategy. In fact, most of the firm’s recent launches have been factor-focused products. Friedman notes that the four factors captured in the multifactor methodology have already been highlighted by Fidelity’s launch of a family of single-factor U.S. ETFs in 2016.

“Generally speaking, what we are focused on is ‘how do we bring the best of Fidelity to our clients?’” Friedman said. “These are the factors we thought were the most pertinent. These are the factors our clients desire the most.”

Friedman said that Fidelity’s smart-beta focus is about outcomes and solutions: “These are very tactical tools that allow our clients to get a particular outcome or solution they’re looking for.”

The new ETFs are the firm’s first multifactor ETFs, and FDEM is Fidelity’s first emerging market ETF. FSMD is the firm’s first “smid” ETF.

With these launches, Fidelity is well on its way to building its own multifactor ETF family.

Contact Heather Bell at [email protected]

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