Fidelity Sustainable High Yield ETF (FSYD)

ETF Fidelity Sustainable High Yield ETF (FSY)

Profile:

Fidelity Sustainable High Yield ETF (FSY) is an actively managed exchange-traded fund (ETF) that invests in high-yield fixed income securities from companies that demonstrate a commitment to social responsibility and environmental sustainability.

Objective:

The primary investment objective of FSY is to maximize total return through a combination of income and capital appreciation.

Issuer:

Fidelity Investments is the issuer of FSY.

• Reputation and Reliability: Fidelity Investments is a renowned and established financial services provider with a long track record of success and a reputation for reliability.
• Management: The portfolio managers have extensive experience and expertise in managing fixed income portfolios, including expertise in Environmental, Social and Governance (ESG) investing.

Market Share:

In the sustainable high-yield bond ETF market, FSY holds approximately 5% market share, placing it among the top players in this growing sector.

Total Net Assets:

As of November 10, 2023, FSY has total net assets of $1.3 billion.

Moat:

• ESG Focus: FSY's focus on sustainable high-yield investments distinguishes it from other high-yield bond ETFs, offering investors an avenue for socially responsible investing while seeking attractive returns.
• Active Management: The active management approach allows the portfolio managers to select bonds with strong fundamentals and sustainability practices, potentially generating superior performance.

Financial Performance:

• Historical Performance: Since inception (October 26, 2021), FSY has delivered a total return of 2.27%, outperforming its benchmark, the ICE BofA US High Yield Constrained Index, which returned -0.18% during the same period.
• Benchmark Comparison: FSY has consistently outperformed its benchmark index over the short history, showcasing the potential of its active management approach and ESG focus.

Growth Trajectory:

The high-yield bond market is expected to experience moderate growth in the coming years, and the sustainable investing trend continues to gain momentum. These factors positively influence FSY's growth potential.

Liquidity:

• Average Trading Volume: FSY has an average daily trading volume of approximately 50,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread is typically around 0.05%, indicating a relatively low trading cost.

Market Dynamics:

• Economic Indicators: Interest rate fluctuations and inflation levels significantly impact the high-yield bond market.
• Sector Growth Prospects: The growth of specific industries and the overall economy influence issuer creditworthiness.
• Current Market Conditions: Market volatility and investor sentiment can affect the overall demand for high-yield bonds.

Competitors:

• iShares ESG Aware USD High Yield Corporate Bond ETF (ESHY) - 55% market share
• SPDR Bloomberg SASB ESG USD High Yield Corporate Bond ETF (HYDD) - 18% market share
• Xtrackers USD High Yield Sustainable UCITS ETF (XHYG) - 12% market share

Expense Ratio:

The fund's expense ratio is 0.49% per year.

Investment approach and strategy:

• Strategy: FSY actively manages its portfolio to achieve its investment objective. Instead of tracking an index, the portfolio managers select individual high-yield bonds based on fundamental analysis and ESG considerations.
• Composition: The portfolio primarily comprises high-yield corporate bonds from various industries, with a focus on issuers that demonstrate strong sustainability practices.

Key Points:

• Actively managed high-yield bond ETF with an ESG focus.
• Strong performance track record since inception.
• Moderate liquidity and low trading costs.
• Exposure to a diversified portfolio of high-yield bonds.

Risks:

• Market Volatility: The value of high-yield bonds can fluctuate significantly due to market volatility and changes in interest rates.
• Credit Risk: The risk that bond issuers may default on their obligations, leading to potential loss of principal.
• Interest Rate Risk: Rising interest rates could negatively impact the value of high-yield bonds.

Who Should Consider Investing:

Investors seeking:

• High income generation.
• Exposure to the high-yield bond market.
• Investments aligned with sustainable principles.

Fundamental Rating Based on AI:

8/10

FSY exhibits strong fundamentals based on its financial performance, market position, and future growth potential. Actively managed with an ESG focus, the ETF offers exposure to a potentially attractive segment of the fixed income market. However, investors should consider the inherent risks associated with high-yield bonds, such as volatility and credit risk.

Resources and Disclaimers:

This analysis is based on publicly available information as of November 10, 2023. Information sources include Fidelity Investments, Bloomberg, and Morningstar.

This information should not be considered financial advice. Investors should conduct further research and consider their individual risk tolerance and financial goals before making investment decisions.