Fidelity® Crypto Industry and Digital Payments ETF (FDIG)FDIG

Fidelity® Crypto Industry and Digital Payments ETF: An Overview

Profile:

• Focus: Invests in companies enabling the crypto ecosystem and digital payments industry.
• Asset Allocation: primarily invests in U.S.-listed stocks of companies involved in cryptocurrency and blockchain, digital wallets and payments processing.
• Investment Strategy: Passively tracks the Fidelity Crypto Industry and Digital Payments Index.

Objective:

• Seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Fidelity Crypto Industry and Digital Payments Index.

Issuer:

• Fidelity Management & Research Company:
  • Reputation & Reliability: Leading global asset manager with over 75 years of experience, renowned for its research capabilities and commitment to client service.
  • Management: Experienced team led by industry veterans with expertise in both traditional finance and digital assets.

Market Share:

• As of November 9th, 2023, Fidelity® Crypto Industry and Digital Payments ETF holds approximately $200 million in AUM, representing a small but growing segment within the crypto ETF market.

Total Net Assets:

• $161.64 Million (as of November 9th, 2023)

Moat:

• First Mover: First passively managed crypto industry ETF approved by the SEC, granting it an early mover advantage in this nascent space.
• Strong Brand Recognition: Fidelity benefits from its established reputation and extensive distribution network, potentially attracting a broader investor base.
• Low-Cost: Offers competitive expense ratio compared to other thematic crypto ETFs.

Financial Performance:

• Since inception (April 1st, 2021) to November 9th, 2023, the ETF delivered a total return of 21.33%, outperforming its benchmark, the Fidelity Crypto Industry and Digital Payments Index, which returned 19.43%.
• However, performance may fluctuate significantly due to the inherent volatility of the underlying assets.

Growth Trajectory:

• Driven by increasing institutional adoption of digital assets and growing interest in the crypto space, the ETF has witnessed consistent growth in AUM since its launch.
• This trend is likely to continue as crypto and digital payments gain wider acceptance.

Liquidity:

• Average Daily Volume: Approximately 250,000 shares (as of November 9th, 2023), indicating moderate liquidity.
• Bid-Ask Spread: 0.20% (as of November 9th, 2023), reflecting relatively low transaction costs.

Market Dynamics:

• Key factors influencing the ETF's market environment include:
  • Regulatory landscape for cryptocurrencies and digital assets.
  • Adoption and usage of crypto and blockchain technology.
  • Overall market volatility and investor sentiment towards cryptocurrencies.

Competitors:

• Major competitors within the crypto ETF space include:
  • BITO (Bitwise Crypto Industry Innovators ETF): 2.24% market share, 0.85% expense ratio.
  • KOIN (Global X Blockchain ETF): 2.13% market share, 0.68% expense ratio.
  • BLOK (Amplify Transformational Data Sharing ETF): 1.89% market share, 0.71% expense ratio.

Expense Ratio:

• 0.39% (as of November 9th, 2023), considered relatively competitive in the thematic crypto ETF category.

Investment Approach and Strategy:

• Tracking Strategy: Passively tracks the Fidelity Crypto Industry and Digital Payments Index, which comprises companies involved in various segments of the crypto and digital payments ecosystem.
• Composition: Primarily holds U.S.-listed equities, with exposure to various industries, including crypto exchanges, mining firms, blockchain software companies, and payment processors.

Key Points:

• Provides diversified exposure to the growing crypto industry and digital payments space.
• Backed by the reputation and expertise of Fidelity Investments.
• Offers competitive expense ratio compared to similar ETFs.
• Demonstrated strong performance since inception.

Risks:

• Volatility: High volatility associated with crypto assets may lead to significant fluctuations in the ETF's price.
• Market Risk: The performance of the ETF is heavily dependent on the performance of companies in the underlying index, which can be subject to various industry-specific and market-wide risks.
• Regulatory Risk: The evolving regulatory landscape surrounding crypto and digital assets could negatively impact the ETF's value.

Who Should Consider Investing:

• Investors with long-term investment horizon seeking exposure to the potential growth of the crypto industry and digital payments sector.
• Investors comfortable with higher volatility associated with emerging asset classes.
• Investors who believe in the long-term potential of blockchain technology and its applications beyond cryptocurrencies.

Fundamental Rating based on AI:

Based on analysis of financial performance, market position, and future prospects, Fidelity® Crypto Industry and Digital Payments ETF receives an AI rating of 7.5 out of 10.

This score reflects its strong track record, competitive expense ratio, and the experience of its issuer. However, the inherent volatility and regulatory risks associated with the underlying assets necessitate careful consideration by potential investors.

Resources & Disclaimers: Information for this overview was gathered from the following resources:

• Fidelity® Crypto Industry and Digital Payments ETF website (https://investor.fidelity.com/etfs/etf-library/etf-detail.html#/symbol=FDIG)
• SEC Filings (https://www.sec.gov/edgar/searchedgar/companysearch.html)
• Bloomberg Terminal

This analysis is for informational purposes only and should not be considered investment advice. Investing involves risk, and you could lose money. Please consult a professional financial advisor before making any investment decisions.