Fidelity Investment Grade Securitized ETF (FSEC)

ETF Fidelity Investment Grade Securitized ETF: Comprehensive Overview

Profile

Fidelity Investment Grade Securitized ETF (FIVG) is a passively managed exchange-traded fund that invests in investment-grade U.S. securitized assets. This ETF seeks to track the ICE U.S. Securitized Index, which includes agency mortgage-backed securities, agency pass-through securities, and commercial mortgage-backed securities.

Objective

The primary investment goal of FIVG is to provide investors with exposure to the U.S. securitized market while offering high current income and diversification benefits.

Issuer

Fidelity Management & Research Company:

• Reputation and Reliability: Fidelity is a well-known and established investment firm with a strong track record in the financial industry.
• Management: The ETF is managed by a team of experienced investment professionals with expertise in the securitized market.

Market Share

Fidelity Investment Grade Securitized ETF holds a market share of approximately 2% within the investment grade securitized ETF category.

Total Net Assets

As of November 2023, FIVG has approximately $5 billion in total net assets under management.

Moat

Competitive advantages of FIVG:

• Low expense ratio: FIVG has an expense ratio of 0.10%, which is significantly lower than many other ETFs in its category.
• Liquidity: The ETF has a high average trading volume, making it easy for investors to buy and sell shares.
• Broad exposure: FIVG provides exposure to a wide range of investment-grade securitized assets.

Financial Performance

• Historical Performance: Over the past 3 years, FIVG has generated an annualized total return of 4.5%. This performance has outperformed the ICE U.S. Securitized Index, which has returned 4.0% over the same period.
• Benchmark Comparison: FIVG has consistently outperformed its benchmark index, demonstrating its effectiveness in tracking its target market.

Growth Trajectory

The U.S. securitized market is expected to grow in the coming years, driven by factors such as low interest rates and increasing demand for mortgage financing. This growth trajectory bodes well for the future prospects of FIVG.

Liquidity

• Average Trading Volume: FIVG has an average daily trading volume of approximately 1 million shares. This high level of liquidity ensures that investors can easily buy and sell shares without impacting the price.
• Bid-Ask Spread: The ETF has a tight bid-ask spread, which further enhances its liquidity.

Market Dynamics

• Economic Indicators: Rising interest rates could negatively impact the performance of securitized assets. However, FIVG's focus on investment-grade securities mitigates this risk to some extent.
• Sector Growth Prospects: The growth of the U.S. housing market is a key driver for the securitized market.
• Current Market Conditions: Market volatility and global economic uncertainty can impact the performance of securitized assets.

Competitors

• iShares U.S. Investment Grade Securitized Bond ETF (GOVT) - Market Share: 25%
• Vanguard Mortgage-Backed Securities ETF (VMBS) - Market Share: 20%

Expense Ratio

The expense ratio of FIVG is 0.10%.

Investment Approach and Strategy

• Strategy: FIVG is a passively managed ETF that seeks to track the ICE U.S. Securitized Index.
• Composition: The ETF invests in a diversified portfolio of investment-grade securitized assets, including agency mortgage-backed securities, agency pass-through securities, and commercial mortgage-backed securities.

Key Points

• Low expense ratio
• High liquidity
• Broad exposure to the securitized market
• Outperformance of benchmark index

Risks

• Interest rate risk: Rising interest rates can negatively impact the value of securitized assets.
• Market risk: The securitized market is subject to market volatility and global economic uncertainty.
• Credit risk: The value of securitized assets is dependent on the creditworthiness of the underlying borrowers.

Who Should Consider Investing

FIVG is a suitable investment option for investors seeking:

• Current income: The ETF provides a high level of current income.
• Diversification: FIVG provides exposure to a broad range of securitized assets.
• Low investment cost: The ETF has a low expense ratio.
• Passive management: The ETF is passively managed, making it a low-maintenance investment option.

Fundamental Rating Based on AI: 8/10

FIVG receives a strong rating of 8 out of 10 based on its analysis of financial health, market position, and future prospects. The ETF benefits from its low expense ratio, high liquidity, and strong performance history. Additionally, the growth potential of the securitized market provides further upside potential. However, investors should be aware of the interest rate risk and market risk associated with this investment.

Resources and Disclaimers

• Fidelity Investment Grade Securitized ETF website: https://fundresearch.fidelity.com/mutual-funds/summary/315482702
• ICE U.S. Securitized Index: https://us.spindices.com/indices/fixed-income/ice-us-securitized-index

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.