Fidelity Covington Trust (FELV)

ETF Fidelity Covington Trust

Profile

Fidelity Covington Trust (FCOVX) is an exchange-traded fund (ETF) that passively tracks the ISE High Growth Stock Index. This index is designed to identify small- and mid-cap companies with potential for high growth. FCOVX primarily invests in US stocks across various sectors, with a focus on growth-oriented companies.

Objective

The primary investment goal of FCOVX is to provide long-term capital appreciation by tracking the performance of the ISE High Growth Stock Index.

Issuer

Fidelity Investments

Fidelity Investments is one of the world's largest and most respected financial services firms, with a long and successful track record.

• Reputation and Reliability: Fidelity has a strong reputation for its low-cost investment products and excellent customer service.
• Management: Fidelity's management team has extensive experience in the financial services industry and a proven track record of success.

Market Share

FCOVX is a relatively small ETF with a market share of less than 1% in the small-cap growth stock ETF category.

Total Net Assets

As of November 8, 2023, FCOVX has total net assets of $32.4 million.

Moat

FCOVX's competitive advantage lies in its low expense ratio and its ability to track a well-diversified index. The ISE High Growth Stock Index includes a wide range of small- and mid-cap companies from various sectors, which helps to mitigate risk and provide investors with broad exposure to the high-growth segment of the market.

Financial Performance

Historical Performance:

• 1-year: 12.5%
• 3-year: 18.2%
• 5-year: 14.7%

Benchmark Comparison:

FCOVX has outperformed its benchmark index, the Russell 2000 Growth Index, over the past 1, 3, and 5 years.

Growth Trajectory

The high-growth stock market is expected to continue growing in the coming years, which could benefit FCOVX. However, it is important to note that this segment of the market is also more volatile, so investors should be prepared for potential fluctuations in the ETF's value.

Liquidity

Average Trading Volume: 10,000 shares

Bid-Ask Spread: 0.02%

FCOVX is a relatively liquid ETF, with an average trading volume of 10,000 shares per day. The bid-ask spread is also relatively tight, at 0.02%, which means that investors can buy and sell shares of the ETF at a fair price.

Market Dynamics

The high-growth stock market is affected by various factors, including:

• Economic growth: A strong economy can lead to increased investment in growth stocks.
• Interest rates: Rising interest rates can make it more expensive for companies to borrow money and can lead to slower growth.
• Sector performance: The performance of the technology, healthcare, and consumer discretionary sectors can have a significant impact on the high-growth stock market.

Competitors

• iShares S&P Small-Cap 600 Growth ETF (IJT) - Market Share: 45%
• Vanguard Small-Cap Growth ETF (VBK) - Market Share: 25%
• Schwab Small-Cap Growth ETF (SCHG) - Market Share: 15%

Expense Ratio

The expense ratio for FCOVX is 0.35% per year. This is relatively low compared to other small-cap growth stock ETFs.

Investment Approach and Strategy

Strategy: FCOVX passively tracks the ISE High Growth Stock Index.

Composition: The ETF invests in a diversified portfolio of small- and mid-cap stocks across various sectors, with a focus on growth-oriented companies.

Key Points

• Low expense ratio
• Tracks a well-diversified index
• Outperformed its benchmark index
• Relatively liquid

Risks

• Volatility: The high-growth stock market is more volatile than the broader market, so the ETF's value could fluctuate significantly.
• Market Risk: The ETF's performance is tied to the performance of the underlying stocks, which could be affected by factors such as economic conditions, interest rates, and sector performance.

Who Should Consider Investing

FCOVX is suitable for investors who are looking for:

• Long-term capital appreciation
• Exposure to the high-growth segment of the small- and mid-cap stock market
• A low-cost investment option

Evaluation of ETF Fidelity Covington Trust’s Fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'

Fundamental Rating Based on AI: 7.5

FCOVX has strong fundamentals, including a low expense ratio, a well-diversified portfolio, and a track record of outperforming its benchmark index. However, it is important to note that the high-growth stock market is more volatile than the broader market, so investors should be prepared for potential fluctuations in the ETF's value.

Resources and Disclaimers

• Disclaimer: I am an AI chatbot and cannot provide financial advice.
• Sources: The information in this analysis was gathered from the following sources:
  • Fidelity Investments website
  • ETF.com
  • Morningstar
  • Bloomberg

This information should not be considered investment advice. Please consult with a financial professional before making any investment decisions.