Fidelity debuted a quartet of thematic ETFs on Thursday, each priced below competing themed funds already trading.
The Fidelity Digital Health ETF (FDHT), Fidelity Electric Vehicles and Future Transportation ETF (FDRV), Fidelity Clean Energy ETF (FRNW) and Fidelity Cloud Computing ETF (FCLD) all debuted on the Cboe Global Market, each sporting an expense ratio of 0.39%.
All four are passive funds following custom in-house indexes by Fidelity that correspond to the industries in their names. Those indexes are not limited by geography or market capitalization.
Scott O'Reilly, Fidelity’s head of index, sector, thematic and factor investment products, said the firm is using a proprietary “thematic relevance score” to prioritize companies with the largest exposure to the growth of their respective themes for inclusion in the underlying index.
“We think that's a differentiator relative to some competitors in the market,” he said.
The funds also appear priced for small undercuts against established ETFs in their respective niches. FRNW is 3 basis points cheaper than the $5.7 billion iShares Global Clean Energy ETF (ICLN), and FCLD has a 21 basis point advantage against the $6.1 billion First Trust Cloud Computing ETF (SKYY). FDRV and FDHT are both 29 basis points cheaper than the $1.0 billion Global X Autonomous & Electric Vehicles ETF (DRIV) and the $569.1 million Global X Telemedicine & Digital Health ETF (EDOC).
Fidelity currently has approximately $30.5 billion in ETF assets split between 42 funds. The only other thematic fund in its stable as determined by ETF.com data provider FactSet is the Fidelity New Millennium ETF (FMIL), which has just under $58 million in assets.