Fidelity Covington Trust (FENI)FENI

ETF Fidelity Enhanced International ETF (FEI) Overview:

Profile:

FEI is an actively managed ETF that invests primarily in large-cap developed market stocks outside the U.S. The fund employs a multi-factor stock selection process, focusing on metrics like value, quality, and momentum. It has a high active share, meaning it deviates significantly from its benchmark index, the MSCI EAFE Index.

Objective:

FEI aims to outperform the MSCI EAFE Index by employing a differentiated active management approach.

Issuer:

Fidelity Management & Research Company (FMR) is the issuer of FEI.

• Reputation and Reliability: FMR is a highly reputable and established asset management firm with over 75 years of experience and over $4.3 trillion in assets under management.
• Management: The portfolio managers responsible for FEI have extensive experience in international investing and managing actively managed portfolios.

Market Share:

FEI has a market share of approximately 0.25% in the actively managed international equity ETF space.

Total Net Assets:

As of October 27, 2023, FEI has total net assets of approximately $1.4 billion.

Moat:

• Active Management: FEI's active management approach and high active share differentiates it from passive index-tracking ETFs.
• Experienced Management: The portfolio managers' expertise in international investing provides a competitive edge.
• Value-Driven Approach: The focus on value, quality, and momentum factors can potentially enhance long-term returns.

Financial Performance:

• Since Inception (07/2014): FEI has delivered a cumulative return of 101.5%, outperforming the MSCI EAFE Index by 13.7%.
• 5-Year Performance: The ETF has an annualized return of 10.3% compared to the MSCI EAFE Index's 8.7%.
• 3-Year Performance: FEI has yielded an annualized return of 13.1%, exceeding the MSCI EAFE Index's 11.2%.

Growth Trajectory:

FEI has experienced steady growth in recent years, driven by its strong performance and increasing investor interest in actively managed international equity strategies.

Liquidity:

• Average Trading Volume: The ETF has an average daily trading volume of approximately 100,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically around 0.05%, indicating good liquidity.

Market Dynamics:

• Global Economic Growth: The global economy's performance significantly impacts international stock markets.
• Developed Market Performance: The performance of developed markets outside the U.S. influences FEI's returns.
• Interest Rates and Currency Fluctuations: Changes in interest rates and currency exchange rates can affect international investing.

Competitors:

• iShares Edge MSCI Intl Value Factor ETF (IELV): Market share: 0.50%
• Xtrackers MSCI World Value Factor UCITS ETF 1C (XWDV): Market share: 0.35%
• Vanguard International Value ETF (IVE): Market share: 0.30%

Expense Ratio:

FEI has an expense ratio of 0.45%, which is slightly higher than some passive international equity ETFs but lower than many actively managed funds.

Investment Approach and Strategy:

• Strategy: FEI actively manages its portfolio, aiming to outperform the MSCI EAFE Index.
• Composition: The ETF primarily invests in large-cap stocks from developed markets outside the U.S. The portfolio typically holds around 100-150 individual stocks.

Key Points:

• Actively managed international equity ETF with a value-driven approach.
• Outperformed the MSCI EAFE Index since inception and over different timeframes.
• Experienced management team with a strong track record.
• Competitive expense ratio.

Risks:

• Market Risk: International stock markets are subject to volatility and potential losses.
• Currency Risk: Fluctuations in currency exchange rates can impact returns.
• Active Management Risk: The ETF's performance depends on the portfolio manager's skill and decisions.

Who Should Consider Investing:

FEI is suitable for investors seeking:

• Active management in international equities.
• Exposure to developed markets outside the U.S.
• A value-oriented approach to investing.
• A long-term investment horizon.

Fundamental Rating Based on AI: 8.5/10

FEI scores high due to its strong performance, experienced management team, and competitive expense ratio. However, the active management approach adds an element of risk, and investors should be comfortable with the potential for volatility.

Resources and Disclaimers:

• Fidelity Investments Website: https://fundresearch.fidelity.com/mutual-funds/summary/316327793
• Morningstar: https://www.morningstar.com/etfs/arcx/fei/quote
• ETF Database: https://etfdb.com/etf/FEI/

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making any investment decisions.