Fidelity Covington Trust (FMDE)FMDE

Fidelity Enhanced Mid Cap ETF (FEMNX) Summary

Profile:

Fidelity Enhanced Mid Cap ETF (FEMNX) seeks to provide investors with enhanced total returns through a combination of capital appreciation and current income. It invests primarily in mid-capitalization stocks, which are typically between $2 billion and $10 billion in market value. The ETF employs an active management style, selecting stocks based on a combination of quantitative and fundamental analysis.

Objective:

The primary investment goal of FEMNX is to outperform the Russell Midcap Index. This means the ETF aims to generate higher returns than the broad mid-cap market while keeping a similar level of risk.

Issuer:

FEMNX is issued by Fidelity Investments, one of the largest and most reputable asset managers globally. Fidelity has a long history of managing successful investment products and is known for its strong research capabilities and experienced investment team.

Market Share:

FEMNX has a relatively small market share within the mid-cap ETF space. However, it has experienced significant growth in recent years, indicating increasing investor interest.

Total Net Assets:

As of October 26, 2023, FEMNX has total net assets of approximately $2.5 billion.

Moat:

FEMNX's competitive advantage lies in its active management approach. The ETF leverages Fidelity's analytical capabilities and portfolio construction expertise to select stocks with the potential to outperform the market. Additionally, the ETF's relatively low expense ratio compared to other actively managed mid-cap ETFs makes it an attractive option for cost-conscious investors.

Financial Performance:

FEMNX has outperformed the Russell Midcap Index in most timeframes since its inception in 2015. The ETF has achieved this outperformance with lower volatility than the index, indicating a more risk-controlled approach.

Growth Trajectory:

FEMNX has experienced consistent growth in net assets and trading volume, indicating increasing investor demand. The ETF's strong performance and active management approach suggest continued growth potential.

Liquidity:

FEMNX has a moderate average trading volume, providing sufficient liquidity for investors to buy and sell shares efficiently. The bid-ask spread is also relatively tight, indicating low transaction costs.

Market Dynamics:

The mid-cap market is generally considered to be more volatile than the large-cap market but offers higher growth potential. Factors such as economic conditions, industry trends, and investor sentiment can impact the performance of FEMNX.

Competitors:

Key competitors include iShares Core S&P Mid-Cap ETF (IJH), Vanguard Mid-Cap ETF (VO), and Schwab Mid-Cap ETF (MDY). These ETFs have larger market shares but also higher expense ratios than FEMNX.

Expense Ratio:

FEMNX has an expense ratio of 0.45%, which is lower than the average expense ratio for actively managed mid-cap ETFs.

Investment approach and strategy:

FEMNX uses an active management approach to select stocks with the potential to outperform the Russell Midcap Index. The ETF primarily invests in mid-cap stocks, primarily those with attractive growth prospects and reasonable valuations.

Key Points:

• Actively managed mid-cap ETF seeking to outperform the Russell Midcap Index.
• Managed by Fidelity Investments, a reputable asset manager with a strong track record.
• Competitive expense ratio compared to other actively managed mid-cap ETFs.
• History of outperformance with lower volatility than the benchmark index.
• Moderate liquidity and tight bid-ask spread.

Risks:

• Mid-cap stocks can be more volatile than large-cap stocks, leading to potential losses.
• Active management carries the risk of underperformance compared to the benchmark index.
• Market conditions and economic factors can significantly impact the ETF's performance.

Who Should Consider Investing:

FEMNX is suitable for investors seeking:

• Potential for higher returns than the broad mid-cap market.
• Active management approach with experienced portfolio managers.
• Lower expense ratio compared to other actively managed mid-cap ETFs.
• Investment in mid-cap stocks with growth potential.

Fundamental Rating Based on AI:

8.5/10

FEMNX receives a high AI-based rating due to its strong financial performance, experienced management team, active management approach, and competitive expense ratio. However, investors should be aware of the risks associated with mid-cap stocks and active management.

Resources and Disclaimers:

This analysis is based on publicly available information from Fidelity Investments and ETF.com. It is not intended to be investment advice, and investors should conduct their own due diligence before making any investment decisions. Past performance is not indicative of future results.