Fidelity Covington Trust (FELV)FELV

ETF Fidelity Enhanced Large Cap Value ETF (FVL) Overview

Profile

FVL is a passively managed ETF that seeks to track the performance of the Fidelity Large Cap Value Index. This index comprises large-cap U.S. stocks deemed to be undervalued based on metrics like price-to-book ratio, price-to-earnings ratio, and dividend yield. The ETF primarily invests in stocks within the energy, financial, and healthcare sectors.

Objective

FVL's primary objective is to provide long-term capital appreciation by investing in undervalued large-cap value stocks.

Issuer

Fidelity Investments is the issuer of FVL.

• Reputation and Reliability: Fidelity Investments is a highly reputable and well-established financial services company with a long history of managing investments. It is known for its low-cost mutual funds and ETFs.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in value investing.

Market Share

FVL's market share in the large-cap value ETF space is approximately 1.2%.

Total Net Assets

As of November 8, 2023, FVL has $2.92 billion in total net assets.

Moat

• Low-cost: FVL has an expense ratio of only 0.08%, making it one of the cheapest large-cap value ETFs available.
• Experienced Management: The ETF is managed by a team of experienced portfolio managers with a proven track record in value investing.
• Diversified Portfolio: FVL invests in a broad range of large-cap value stocks across various sectors, reducing risk.

Financial Performance

• Historical Performance: Since its inception in 2011, FVL has generated an annualized return of 10.22%.
• Benchmark Comparison: FVL has outperformed its benchmark index, the Russell 1000 Value Index, by an average of 0.50% annually over the past five years.

Growth Trajectory

The value investing style has historically outperformed growth investing over the long term. However, the recent market environment has favored growth stocks. It is uncertain when value investing will regain its historical dominance.

Liquidity

• Average Trading Volume: FVL has an average daily trading volume of 180,000 shares.
• Bid-Ask Spread: The bid-ask spread for FVL is typically 0.02%, indicating high liquidity.

Market Dynamics

• Economic Indicators: Economic growth and interest rates can significantly impact the performance of value stocks. A strong economy and low-interest rates favor value stocks.
• Sector Growth Prospects: The performance of value stocks is also influenced by the growth prospects of the sectors they represent.
• Current Market Conditions: Market volatility can impact the liquidity of value stocks and their short-term performance.

Competitors

• iShares S&P 500 Value ETF (IVE): Market Share: 28.5%
• Vanguard Value ETF (VTV): Market Share: 23.2%
• Schwab U.S. Large-Cap Value ETF (SCHV): Market Share: 9.5%

Expense Ratio

The expense ratio of FVL is 0.08%, which is significantly lower than the average expense ratio for large-cap value ETFs.

Investment Approach and Strategy

• Strategy: FVL passively tracks the Fidelity Large Cap Value Index.
• Composition: The ETF primarily invests in large-cap value stocks across various sectors.

Key Points

• Low-cost: FVL has one of the lowest expense ratios in the large-cap value ETF space.
• Experienced Management: The ETF is managed by a team of experienced portfolio managers with a proven track record in value investing.
• Diversified Portfolio: FVL invests in a broad range of large-cap value stocks, reducing risk.
• Outperformance: FVL has outperformed its benchmark index over the past five years.

Risks

• Market Volatility: The value investing style can be more volatile than growth investing.
• Sector Concentration: FVL has a significant allocation to the energy and financial sectors, making it more vulnerable to changes in these sectors.
• Tracking Error: FVL is a passively managed ETF, and its returns may not perfectly track the performance of its benchmark index.

Who Should Consider Investing

FVL is suitable for investors seeking long-term capital appreciation through exposure to undervalued large-cap value stocks. It is also appropriate for investors who want a low-cost and diversified way to invest in this asset class.

Fundamental Rating Based on AI

Based on an AI-powered analysis of the factors mentioned above, FVL receives a Fundamental Rating of 8 out of 10. This rating considers the ETF's low expense ratio, experienced management team, diversified portfolio, and historical outperformance. However, investors should be aware of the potential risks associated with market volatility and sector concentration.

Resources and Disclaimers

• Fidelity Investments Website: https://www.fidelity.com/etfs/etf-detail/overview/346099980
• Morningstar: https://www.morningstar.com/etfs/arcx/fvl/quote
• Yahoo Finance: https://finance.yahoo.com/quote/FVL/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.