Fidelity added to its lineup of factor-based exchange traded funds Thursday with the launches of three new funds.

There are now 28 Fidelity ETFs, including 13 factor funds, according to the firm's ETF website.

What Happened

Each of the new Fidelity ETFs are multi-factor funds. The new funds are the Fidelity Small-Mid Factor ETF (NYSE:FSMD), Fidelity Targeted International Factor ETF (NYSE:FDEV) and Fidelity Targeted Emerging Markets Factor ETF (NYSE:FDEM).

FSMD follows the Fidelity Small-Mid Factor Index. That benchmark “is designed to reflect the performance of stocks of smalland mid-capitalization U.S. companies with attractive valuations, high quality profiles, positive momentum signals, and lower volatility than the broader market,” according to Fidelity.

FSMD charges 0.29 percent per year, or $29 on a $10,000 investment. Over 80 percent of the new ETF's holdings are mid- and small-cap stocks while more than 16 percent are classified as micro caps. Financial services and industrial names combine for almost 32 percent of FSMD's weight.

Why It's Important

The Fidelity Targeted International Factor ETF tracks the Fidelity Targeted International Factor Index. That index “is designed to reflect the performance of stocks of large- and mid-capitalization developed international companies that have attractive valuations, high quality profiles, positive momentum signals, lower volatility than the broader developed international equity market, and lower correlation to the U.S. equity market,” according to Fidelity.

The new ETF holds 199 stocks, nearly 55 percent of which are European companies. Asia and North America combine for over 44 percent of FDEV's geographic exposure. Financials, consumer staples and consumer discretionary names combine for over 44 percent of the new ETF's sector weights.

FDEV's annual fee is 0.39 percent.

What's Next

The Fidelity Targeted Emerging Markets Factor ETF follows the Fidelity Targeted Emerging Markets Factor Index. That index also employs the value, quality, momentum and low volatility factors. FDEM holds 188 stocks and charges 0.45 percent per year.

China and South Korea are the largest emerging markets represented in the new fund. Those countries combine for over 28 percent of FDEM's geographic profile.

Each of the new Fidelity ETFs is part of the firm's growing commission-free ETF platform.

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Friday, March 01, 2019