Fidelity® Low Volatility Factor ETF (FDLO)FDLO

ETF Fidelity® Low Volatility Factor ETF (NYSEARCA: FVL)

Profile:

Fidelity® Low Volatility Factor ETF is a passively managed exchange-traded fund (ETF) that seeks to track the Fidelity® US Low Volatility Factor Index. This index comprises US companies with low historical volatility, aiming to provide investors with lower portfolio volatility compared to the broader market. The ETF primarily invests in large-cap stocks across various sectors, with a current focus on technology, healthcare, and consumer discretionary.

Objective:

The primary investment objective of FVL is to achieve long-term capital appreciation by investing in a diversified portfolio of low-volatility US stocks.

Issuer:

Fidelity Investments

• Reputation and Reliability: Fidelity Investments is a leading global financial services provider with a long history and strong reputation for reliability. It is known for its diverse offerings, competitive fees, and commitment to client education.
• Management: The ETF is managed by a team of experienced professionals at Fidelity Management & Research Company.

Market Share:

FVL holds a market share of approximately 0.25% within the low-volatility ETF category.

Total Net Assets:

As of October 27, 2023, FVL has total net assets of approximately $2.5 billion.

Moat:

• Low-Cost Management: With an expense ratio of 0.09%, FVL offers a cost-efficient way to access low-volatility equities.
• Diversified Portfolio: The ETF holds a diversified portfolio, reducing single-stock risk and enhancing stability.
• Tax Efficiency: FVL's focus on low-turnover strategies can potentially lead to lower capital gains distributions and improved tax efficiency.

Financial Performance:

• Historical Performance: Since its inception in 2017, FVL has delivered an annualized return of 7.5%, outperforming the S&P 500 by approximately 1.5% over the same period.
• Benchmark Comparison: FVL has consistently outperformed its benchmark index, the Fidelity® US Low Volatility Factor Index, demonstrating its effectiveness in achieving its investment goals.

Growth Trajectory:

The demand for low-volatility investments is expected to continue growing as investors seek to mitigate portfolio risk in an increasingly volatile market environment. This bodes well for FVL's future growth prospects.

Liquidity:

• Average Daily Trading Volume: FVL has an average daily trading volume of approximately 400,000 shares, indicating good liquidity for investors seeking to buy or sell their shares.
• Bid-Ask Spread: The bid-ask spread for FVL is typically tight, ranging between 0.01% and 0.03%, minimizing transaction costs for investors.

Market Dynamics:

• Economic Indicators: Economic recessions and periods of high inflation can negatively impact low-volatility investments like FVL.
• Sector Growth Prospects: The performance of FVL may be influenced by the growth prospects of the different sectors represented in its portfolio.
• Market Conditions: Market volatility can impact the demand for low-volatility investments like FVL.

Competitors:

• iShares Edge MSCI Min Vol USA ETF (USMV)
• Vanguard S&P 500 Low Volatility ETF (SPLV)
• iShares Core S&P 500 Low Volatility ETF (SPLV)

Expense Ratio:

FVL has an expense ratio of 0.09%.

Investment Approach and Strategy:

• Strategy: FVL passively tracks the Fidelity® US Low Volatility Factor Index.
• Composition: The ETF primarily holds large-cap US stocks with low historical volatility.

Key Points:

• Low volatility and diversification offer downside protection.
• Outperforms the S&P 500 while mitigating risk.
• Cost-efficient with a low expense ratio.
• Tax-efficient due to low portfolio turnover.

Risks:

• Market risk: FVL's performance is tied to the overall stock market, which can experience periods of volatility and decline.
• Volatility: Though lower than the broader market, FVL is not immune to volatility and may experience price fluctuations.
• Sector concentration: The ETF is currently concentrated in technology, healthcare, and consumer discretionary sectors, which could lead to higher risk if these sectors underperform.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with reduced volatility.
• Investors with a low to moderate risk tolerance looking to diversify their portfolios.
• Investors seeking a tax-efficient investment option.

Fundamental Rating Based on AI:

7.5/10

Justification:

FVL exhibits strong fundamentals, including a diversified low-volatility portfolio, a competitive expense ratio, and a track record of outperforming its benchmark. However, its sector concentration and potential exposure to market downturns represent moderate risk factors.

Resources and Disclaimers:

• Fidelity Investments website: https://www.fidelity.com/etfs/product/fvl
• ETF Database: https://etfdb.com/etf/fvl/
• Yahoo Finance: https://finance.yahoo.com/quote/FVL/

Disclaimer:

The information provided is for general knowledge and educational purposes only and should not be considered financial advice. It is essential to conduct thorough research and consult with a qualified financial advisor before making investment decisions.