Fidelity Cuts FDHY Fee in ‘Enhanced’ ETF Lineup

Fidelity Investments has cut the fee on its Fidelity Enhanced High Yield ETF (FDHY), bucking the industry trend of higher costs for active ETFs.

Effective Oct. 1, the total expense ratio for FDHY decreased from 0.45% to 0.35%, Fidelity said.

The fee cut could potentially save investors an estimated $331,000 annually, based on the fund’s assets as of July 31, according to Fidelity. The fund’s current assets under management total $345.8 million, according to etf.com data.

This move comes as the pace of fee decreases in the industry has slowed. Morningstar’s 2023 U.S. Fund Fee Study found that "there were more fee increases than fee decreases among both active and passive funds in 2023," noting that "this is the first time since 2019 this has occurred."

The introduction of more innovative active and alternative strategy ETFs, which often charge higher fees, has been tempering the long-standing trend of declining ETF expenses, Evans said.

Read More: Active ETFs Push Industry Fees Higher

FDHY Joins Fidelity’s Lineup

Fidelity also announced that the fund will be renamed from Fidelity High Yield Factor ETF to Fidelity Enhanced High Yield ETF, effective Oct. 10. The ticker symbol FDHY will remain unchanged.

The rebranding aligns FDHY with Fidelity’s broader lineup of “Enhanced” ETFs, which use quantitative, rules-based approaches to active management.

The fund’s management approach will remain unchanged, continuing to use a quantitative model to screen over 1,000 high-yield bonds for value and quality metric, Fidelity said.

Fidelity’s Enhanced ETF lineup now includes several equity-focused funds alongside FDHY. The Fidelity Enhanced International ETF (FENI) has a 0.28% expense ratio and $1.7 billion in assets, while the Fidelity Enhanced Large Cap Core ETF (FELC) charges 0.18% with $3.7 billion in assets.