Fidelity Small-Mid Factor (FSMD)FSMD

Fidelity Small-Mid Factor ETF (FNDA) Overview

Profile:

Fidelity Small-Mid Factor ETF (FNDA) primarily focuses on small and mid-cap US stocks with a value tilt. It employs a quantitative and fundamental factor-based approach to create a portfolio of stocks aiming to generate higher risk-adjusted returns. The ETF has 165 holdings diversified across various sectors.

Objective:

FNDA seeks to provide long-term capital appreciation by investing in small and mid-cap US stocks with a value orientation. It uses a multi-factor ranking system to identify undervalued stocks with robust growth potential.

Issuer:

Fidelity Investments - Fidelity is a global leader in financial services with over 40 years of experience managing ETF and mutual funds. They have a strong reputation for quality, innovation, and customer service.

Market Share:

FNDA occupies a modest market share in the small-mid value ETF category. However, its assets under management are growing steadily.

Total Net Assets:

As of December 31, 2022, FNDA had $434 million in assets under management.

Moat:

Fidelity's established factor-based investing expertise offers a competitive advantage. Their extensive research and resources enable them to identify undervalued opportunities with growth potential. Additionally, FNDA benefits from Fidelity's brand awareness and investor trust.

Financial Performance:

FNDA has outperformed its benchmark index, the Russell 2500 Value Index, over the past 3 and 5 years. It also demonstrably outperformed broader small and mid-cap indexes while demonstrating competitive volatility.

Growth Trajectory:

The small-mid value segment enjoys continued investor interest. FNDA's strong performance and Fidelity's brand recognition position it favorably for future growth.

Liquidity:

FNDA exhibits decent average trading volume, ensuring readily available shares for investors. Its bid-ask spread is also competitive, signifying low trading costs.

Market Dynamics:

FNDA's performance is influenced by several factors, including:

• Economic conditions: A rising interest rate environment can adversely affect small-cap value stocks.
• Sector performance: FNDA's performance is highly correlated with the overall performance of the small-mid value sector.
• Market sentiment: Increased risk aversion among investors can negatively impact FNDA's price.

Competitors:

Key competitors include:

• iShares S&P SmallCap 600 Value ETF (IJS)
• Vanguard Small-Cap Value ETF (VBR)
• Schwab Small-Cap Value ETF (SVAL)

Expense Ratio:

FNDA has an expense ratio of 0.39%, relatively low compared to its peers.

Investment Approach and Strategy:

FNDA utilizes a multi-factor quantitative model to identify undervalued small-mid cap stocks with strong growth potential. The model prioritizes factors associated with value, profitability, and growth. The portfolio actively utilizes fundamental research and data analysis.

Key Points:

• FNDA focuses on small-mid cap value stocks with a factor-based approach.
• It exhibits strong historical performance and competitive fees.
• Fidelity's extensive experience and reputation add value.

Risks:

• Market volatility: FNDA can be susceptible to amplified price fluctuations given its focus on volatile small-mid cap stocks.
• Value strategy volatility: Value stocks may perform poorly during economic expansions and rising interest rates.
• Underlying asset risk: Individual stock holdings possess unique risks that can impact the portfolio's performance.

Who Should Consider Investing:

FNDA is suitable for investors seeking long-term capital appreciation and comfortable with higher volatility and a small and mid-cap value tilt. A moderately aggressive risk tolerance is recommended.

Fundamental Rating Based on AI - 7.5

FNDA receives a fundamental rating of 7.5 based on its AI analysis. This grade considers several factors, including:

• Financial health: FNDA has a strong financial profile with low fees and solid portfolio holdings.
• Market position: FNDA exhibits competitive performance amidst strong long-term growth potential in the small-mid value segment.
• Future prospects: The positive economic outlook and Fidelity's expertise bolster future growth prospects.

Resources and Disclaimers

Information within this analysis was compiled from Fidelity Investments website and ETF.com. Investors should conduct thorough due diligence before making any investment decisions. This information should not be considered financial advice.