Fidelity® Low Volatility Factor ETF (FDLO)

Fidelity® Low Volatility Factor ETF (FDLO) Summary:

Profile:

FDLO is a passively managed exchange-traded fund that tracks the Fidelity® Low Volatility Factor Index. This index selects stocks from the Russell 1000 Index based on their low volatility and other factors like value, momentum, and quality. The ETF invests primarily in large-cap US stocks.

Objective:

FDLO aims to provide investors with long-term capital appreciation through exposure to the low volatility segment of the US large-cap equities market.

Issuer:

• Fidelity Investments: A renowned financial services institution with a long-standing reputation for reliability and innovation.
• Track record: Fidelity boasts a successful history of managing various investment products, including ETFs.
• Management: Experienced portfolio managers with expertise in quantitative and factor investing strategies oversee FDLO.

Market Share:

FDLO holds a considerable market share within the low volatility factor ETF space.

Total Net Assets:

The ETF currently manages over $3 billion in total assets.

Moat:

• Unique strategy: FDLO employs a multi-factor approach, combining low volatility with other fundamental factors, to construct its portfolio.
• Disciplined process: The ETF utilizes a quantitative and rules-based methodology for selecting underlying securities.
• Cost-effectiveness: FDLO comes with a relatively low expense ratio.

Financial Performance:

• Historical performance: FDLO has historically outperformed the broader market during periods of high volatility.
• Benchmark comparison: The ETF has consistently outperformed its benchmark, the Russell 1000 Index, over various timeframes.

Growth Trajectory:

FDLO has witnessed steady growth in its assets under management, indicating investor confidence in the ETF's strategy.

Liquidity:

• Average Trading Volume: FDLO enjoys a high average daily trading volume, ensuring ease of buying and selling shares.
• Bid-Ask Spread: The bid-ask spread is typically tight, suggesting low transaction costs.

Market Dynamics:

• Factors affecting the market: Economic conditions, interest rate movements, and investor risk appetite significantly impact FDLO's performance.

Competitors:

• iShares Edge MSCI Min Vol USA ETF (USMV): 10.7% market share
• Vanguard U.S. Minimum Volatility ETF (VMIN): 3.46% market share
• Schwab U.S. Broad Market Minimum Volatility ETF (SCHV): 3.16% market share

Expense Ratio:

0.35% per year.

Investment approach and strategy:

• Strategy: Tracks the Fidelity® Low Volatility Factor Index.
• Composition: Holds a diversified portfolio of large-cap US stocks with low volatility and other favorable characteristics.

Key Points:

• Focus on low volatility: Aims to reduce portfolio volatility and downside risk.
• Multi-factor approach: Combines low volatility with other fundamental factors for enhanced risk-adjusted returns.
• Solid track record: Has consistently outperformed its benchmark and broader market in various market conditions.
• Cost-effective: Offers a relatively low expense ratio compared to peers.

Risks:

• Market risk: The ETF's performance is tied to the overall stock market's performance.
• Volatility risk: While aiming for low volatility, the ETF can still experience fluctuations in its value.
• Specific sector exposure: Primarily invests in large-cap US stocks, limiting diversification benefits.

Who Should Consider Investing:

• Investors seeking long-term capital growth with a focus on risk mitigation.
• Individuals with a moderate risk tolerance.
• Investors seeking diversification within their equity portfolio.

Fundamental Rating Based on AI (1-10):

8.5

Justification:

• Strong historical performance relative to benchmark and broader market.
• Experienced management team with a proven track record.
• Transparent and rules-based investment strategy.
• Cost-effective expense ratio.
• Favorable market position within the low volatility ETF space.

Resources and Disclaimers:

• Fidelity Investments website: https://fundresearch.fidelity.com/mutual-funds/summary/341782892
• Morningstar: https://www.morningstar.com/etfs/arcx/fdlo/quote
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.