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Fidelity's New Smart Beta Lineup for Any Market Condition
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Volatility is likely to rear its ugly head over the coming days due to uncertainty over the timing of the Fed rate hike, price swings in the oil patch and global growth issues. Naturally, market participants may rush to shuffle their portfolio to face the looming rising rate environment and the likely uproar in the equity market.
This probably explains, Fidelity’s recent launch of a set of factor-based ETFs. Below we highlight these in detail.
The fund looks to track the performance of stocks of large- and mid-cap dividend-paying companies that are expected to continue to pay and hike their dividends and have a positive correlation of returns to increasing 10-year U.S. Treasury yields (read: Prepare for Rising Rates with These Inverse & Hedged Bond ETFs).
Stocks having high dividend yields historically, low dividend payout ratios, high dividend growth, and a positive correlation of returns to increasing 10-year U.S. Treasury bond yields get an entry card to the underlying index of the fund, as per the issuer.
In a potential rising rate scenario, as the Fed is likely to hike at least once this year, such an offering should soothe the nerves of jittery investors.
Competition: Since the fund takes into consideration several approaches of dividend investing including high yield and consistency of dividend paying, chances of steep competition is low. However, First Trust Morningstar Dividend Leaders ETF (FDL - Free Report) , PowerShares High Yield Equity Dividend Achievers Portfolio ETF (PEY - Free Report) and iShares Dow Jones Select Dividend ETF(DVY - Free Report) can be the close peers of FDRR as the duo operates on more-or-less the same theme.
The fund follows the large- and mid-cap dividend-paying stocks that are likely to maintain dividend payment and hike their dividends. The underlying index comprises stocks of companies with historically high dividend yields, low dividend payout ratios and high dividend growth (read: Keep Faith in These Dividend ETFs to Fight Uncertainty).
Investors should also note that these dividend products will safeguard investors from excessive market gyrations. A substantial yield may offer some support to investors if steep capital losses occur.
Competition: As far as peer pressure is concerned, this fund may also face rivalry from the above-mentioned dividend ETFs.
Low Volatility, Value & Quality ETFs
With volatility levels set to tyrannize ahead, the launch of a low volatility ETF is well-timed. As investors are relentlessly looking for quality products in these volatile circumstances, Fidelity has brought about a quality ETF as well.
The fund looks to track the performance of stocks of large- and mid-cap U.S. companies with low volatility of returns and earnings as well as low beta are part of this ETF.
Competition: There are many products in this spectrum includingiShares Edge MSCI Min Vol USA ETF (USMV), PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) and PowerShares S&P MidCap Low Volatility Portfolio ETF (XMLV).
Stocks of large- and mid-cap U.S. companies with historically high free cash flow margins, high returns on invested capital and high free cash flow stability are allowed to enter the underlying index of the fund (read: 6 Quality ETFs to Sail Through Uncertain Markets).
Competition: iShares Edge MSCI USA Quality Factor ETF (QUAL - Free Report) is likely to pose steep competition to the newly launched fidelity fund.
Stocks with high free cash flow yields, low enterprise value to EBITDA, low price to tangible book value and low price to future earnings get entry into this fund.
Competition: There are plenty of value ETFs in the market. Among the top asset gatherers, iShares Russell 1000 Value ETF (IWD), Vanguard Value ETF (VTV) and iShares S&P 500 Value ETF (IVE) deserve a mention (read: 4 Low P/E Value ETFs & Stocks to Wait Out Uncertainty).
Momentum ETF
Keeping volatility aside, there is also an ETF to play the occasional bounce in the market. So, whenever the market rebounds, investors can play the below-mentioned fund.
The fund looks to track the performance of stocks with positive momentum signals. Stocks having high total and volatility-adjusted returns, high positive earnings surprises and low average short interest are among the fund’s holdings.
Competition: FDMO may have to vie for market share with leading momentum ETFs including First Trust Dorsey Wright Focus 5 ETF (FV - Free Report) , iShares MSCI USA Momentum Factor ETF (MTUM - Free Report) , SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report) .
Want more information on the world of ETFs? Make sure to check out the podcast below where we discuss the investing landscape with Kevin O’Leary and Connor O’Brien of O’Shares Investments:
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
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Fidelity's New Smart Beta Lineup for Any Market Condition
Volatility is likely to rear its ugly head over the coming days due to uncertainty over the timing of the Fed rate hike, price swings in the oil patch and global growth issues. Naturally, market participants may rush to shuffle their portfolio to face the looming rising rate environment and the likely uproar in the equity market.
This probably explains, Fidelity’s recent launch of a set of factor-based ETFs. Below we highlight these in detail.
Dividend ETFs
Fidelity Dividend ETF for Rising Rates (FDRR - Free Report)
The fund looks to track the performance of stocks of large- and mid-cap dividend-paying companies that are expected to continue to pay and hike their dividends and have a positive correlation of returns to increasing 10-year U.S. Treasury yields (read: Prepare for Rising Rates with These Inverse & Hedged Bond ETFs).
Stocks having high dividend yields historically, low dividend payout ratios, high dividend growth, and a positive correlation of returns to increasing 10-year U.S. Treasury bond yields get an entry card to the underlying index of the fund, as per the issuer.
In a potential rising rate scenario, as the Fed is likely to hike at least once this year, such an offering should soothe the nerves of jittery investors.
Competition: Since the fund takes into consideration several approaches of dividend investing including high yield and consistency of dividend paying, chances of steep competition is low. However, First Trust Morningstar Dividend Leaders ETF (FDL - Free Report) , PowerShares High Yield Equity Dividend Achievers Portfolio ETF (PEY - Free Report) and iShares Dow Jones Select Dividend ETF(DVY - Free Report) can be the close peers of FDRR as the duo operates on more-or-less the same theme.
Fidelity Core Dividend ETF (FDVV - Free Report)
The fund follows the large- and mid-cap dividend-paying stocks that are likely to maintain dividend payment and hike their dividends. The underlying index comprises stocks of companies with historically high dividend yields, low dividend payout ratios and high dividend growth (read: Keep Faith in These Dividend ETFs to Fight Uncertainty).
Investors should also note that these dividend products will safeguard investors from excessive market gyrations. A substantial yield may offer some support to investors if steep capital losses occur.
Competition: As far as peer pressure is concerned, this fund may also face rivalry from the above-mentioned dividend ETFs.
Low Volatility, Value & Quality ETFs
With volatility levels set to tyrannize ahead, the launch of a low volatility ETF is well-timed. As investors are relentlessly looking for quality products in these volatile circumstances, Fidelity has brought about a quality ETF as well.
Fidelity Low Volatility Factor ETF (FDLO - Free Report)
The fund looks to track the performance of stocks of large- and mid-cap U.S. companies with low volatility of returns and earnings as well as low beta are part of this ETF.
Competition: There are many products in this spectrum includingiShares Edge MSCI Min Vol USA ETF (USMV), PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) and PowerShares S&P MidCap Low Volatility Portfolio ETF (XMLV).
Fidelity Quality Factor ETF (FQAL - Free Report)
Stocks of large- and mid-cap U.S. companies with historically high free cash flow margins, high returns on invested capital and high free cash flow stability are allowed to enter the underlying index of the fund (read: 6 Quality ETFs to Sail Through Uncertain Markets).
Competition: iShares Edge MSCI USA Quality Factor ETF (QUAL - Free Report) is likely to pose steep competition to the newly launched fidelity fund.
Fidelity Value Factor ETF (FVAL - Free Report)
Stocks with high free cash flow yields, low enterprise value to EBITDA, low price to tangible book value and low price to future earnings get entry into this fund.
Competition: There are plenty of value ETFs in the market. Among the top asset gatherers, iShares Russell 1000 Value ETF (IWD), Vanguard Value ETF (VTV) and iShares S&P 500 Value ETF (IVE) deserve a mention (read: 4 Low P/E Value ETFs & Stocks to Wait Out Uncertainty).
Momentum ETF
Keeping volatility aside, there is also an ETF to play the occasional bounce in the market. So, whenever the market rebounds, investors can play the below-mentioned fund.
Fidelity Momentum Factor ETF FDMO
The fund looks to track the performance of stocks with positive momentum signals. Stocks having high total and volatility-adjusted returns, high positive earnings surprises and low average short interest are among the fund’s holdings.
Competition: FDMO may have to vie for market share with leading momentum ETFs including First Trust Dorsey Wright Focus 5 ETF (FV - Free Report) , iShares MSCI USA Momentum Factor ETF (MTUM - Free Report) , SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report) .
Want more information on the world of ETFs? Make sure to check out the podcast below where we discuss the investing landscape with Kevin O’Leary and Connor O’Brien of O’Shares Investments:
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>