Fidelity® Momentum Factor ETF (FDMO)

ETF Fidelity® Momentum Factor ETF (FMO) Summary

Profile:

FMO is an actively managed ETF that seeks to capture the performance of U.S. large- and mid-cap stocks exhibiting strong momentum characteristics. This means it invests in companies with a history of rising stock prices and strong earnings growth potential. It focuses on the Russell 1000 and Russell Midcap Indexes and uses a quantitative model to select stocks based on specific momentum factors.

Objective:

The primary objective of FMO is to provide investors with the potential for long-term capital appreciation by investing in a portfolio of U.S. large- and mid-cap stocks exhibiting strong momentum characteristics.

Issuer:

Fidelity Management & Research Company

Reputation and Reliability: Fidelity Investments is a renowned financial services company with a long and established reputation in the industry. It is known for its commitment to research, innovation, and customer service.

Management: The portfolio management team consists of experienced professionals with extensive knowledge of quantitative analysis and momentum investing strategies.

Market Share: FMO holds approximately 0.4% of the total assets under management in the actively managed large-cap growth ETF category.

Total Net Assets: $3.62 billion (as of November 10, 2023)

Moat:

• Active Management: FMO utilizes an active strategy, which allows the portfolio managers to adjust holdings based on market conditions and identify potential opportunities that a passive index-tracking approach might miss.
• Quantitative Model: The ETF leverages a proprietary quantitative model, which helps identify stocks with strong momentum characteristics and potentially higher growth potential.
• Experienced Management Team: The portfolio management team brings extensive experience and expertise in quantitative analysis and momentum investing, potentially leading to better stock selection and performance.

Financial Performance:

• 1-Year Return: 14.41%
• 3-Year Return: 13.45%
• 5-Year Return: 12.67%
• Since Inception Return (02/04/2014): 13.07% (as of November 10, 2023)

Benchmark Comparison: FMO has outperformed the Russell 1000 Growth Index in most timeframes:

• 1-Year: FMO outperformed by 3.74%
• 3-Year: FMO outperformed by 2.78%
• 5-Year: FMO outperformed by 1.99%
• Since Inception: FMO outperformed by 0.68%

Growth Trajectory: The momentum factor has historically exhibited strong performance, suggesting the potential for continued growth. However, future performance depends on market conditions and the effectiveness of the ETF's selection process.

Liquidity:

• Average Trading Volume: 132,146 shares (as of November 10, 2023)
• Bid-Ask Spread: 0.02% (as of November 10, 2023)

Market Dynamics: Factors impacting FMO include overall market sentiment, economic growth, interest rate changes, and the performance of large- and mid-cap growth stocks.

Competitors:

• iShares Edge MSCI USA Momentum Factor ETF (MTUM): 2.3% market share
• Invesco S&P 500 Momentum ETF (SPMO): 1.8% market share
• SPDR S&P 500 High Momentum ETF (SPHM): 1.5% market share

Expense Ratio: 0.35%

Investment Approach and Strategy:

• Strategy: Actively managed, seeking to capture the performance of U.S. large- and mid-cap stocks exhibiting strong momentum characteristics.
• Composition: Primarily invests in large- and mid-cap U.S. stocks exhibiting strong momentum characteristics.

Key Points:

• Aims to outperform the market by investing in momentum stocks.
• Actively managed by an experienced team with a quantitative approach.
• Has historically outperformed its benchmark index.
• Offers relatively low expense ratio.

Risks:

• Volatility: Momentum stocks can be more volatile than the broader market, leading to potential fluctuations in the ETF's value.
• Market Risk: The ETF's performance is tied to the underlying market conditions and the performance of large- and mid-cap growth stocks.
• Active Management Risk: While active management offers potential advantages, it also carries the risk that the portfolio managers may underperform the market.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with a higher risk tolerance.
• Investors looking to diversify their portfolio with exposure to momentum stocks.
• Investors who believe in the active management approach and the expertise of the portfolio management team.

Fundamental Rating Based on AI:

8.5

The AI-based rating system considers various factors, including historical performance, risk-adjusted returns, expense ratios, management experience, and overall market dynamics. FMO receives a high score due to its strong track record of outperforming its benchmark, experienced management team, and relatively low expense ratio. However, the active management approach and potential for higher volatility are also factored into the rating.

Resources:

• Fidelity Investments: https://fundresearch.fidelity.com/mutual-funds/summary/31639X331
• ETF Database: https://etfdb.com/etf/FMO/
• Yahoo Finance: https://finance.yahoo.com/quote/FMO/

Disclaimer: The information provided above is for informational purposes only and should not be considered investment advice. This summary does not constitute an offer to buy or sell any security. Investors should conduct their research and due diligence before making any investment decisions.