The 7 Best Fidelity ETFs Tactical Investors Should Buy Now

Fidelity offers an expansive lineup of actively managed mutual funds and passive index funds, but the fund giant is growing its exchange traded funds business in rapid fashion. In fact, some of the best Fidelity ETFs are funds investors of all stripes will want to consider.

Compared to rivals such as iShares, Vanguard and SPDR, Fidelity’s ETF roster is small at 29 total funds — 24 equity-based products and five fixed-income offerings. However, that diminutive status belies the broad opportunities available with some of the best Fidelity ETFs.

Boston-based Fidelity also offers something for tactical and cost-conscious investors, as its lineup of 11 sector ETFs each carry annual fees of 0.084%, or just $8.40 on a $10,000 investment. That makes Fidelity sector ETFs the least expensive in the industry.

With those favorable traits in mind, let’s have a look at some of the best Fidelity ETFs for investors to consider over the near-term:

  • Fidelity Low Volatility Factor ETF (NYSEARCA:FDLO)
  • Fidelity Quality Factor ETF (NYSEARCA:FQAL)
  • Fidelity MSCI Consumer Staples ETF (NYSEARCA:FSTA)
  • Fidelity High Dividend ETF (NYSEARCA:FDVV)
  • Fidelity Stocks for Inflation ETF (CBOE:FCPI)
  • Fidelity MSCI Information Tech ETF (NYSEARCA:FTEC)
  • Fidelity Small-Mid Factor ETF (NYSEARCA:FSMD)

Fidelity Low Volatility Factor ETF (FDLO)

Expense ratio: 0.29% per year, or $29 on a $10,000 investment

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Amid coronavirus commotion, stocks are languishing in March, prompting many investors to embrace the low volatility factor, an objective that can be accomplished with the Fidelity Low Volatility Factor ETF (NYSEARCA:FDLO). FDLO is a volatility-weighted fund that follows the Fidelity U.S. Low Volatility Factor Index.

The core premise underpinning that benchmark is to deliver large- and mid-cap equity exposure with lower volatility traits than are found with standard broad market funds. Of course, there are other variables involved, but the primary question investors need to answer with funds such as FDLO is “does the product perform less poorly when markets tank?”

Year-to-date, FDLO is performing slightly less poorly than the S&P 500. Should markets rebound, FDLO could capture more upside than rival low vol ETFs because the Fidelity fund allocates over a quarter of its weight to technology stocks, a rarity among funds in this category.

Fidelity Quality Factor ETF (FQAL)

Expense ratio: 0.29% per year

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The Fidelity Quality Factor ETF (NYSEARCA:FQAL) is one of the best Fidelity ETFs for the current market environment because companies lacking quality traits are being exposure while those that earn the quality label are performing less poorly. FQAL tracks the Fidelity U.S. Quality Factor Index.

Relative to other investment factors, quality’s definition is often fluid, but some of the standard hallmarks include companies with strong balance sheets, high credit ratings and the ability to sustain and grow dividends — all of which are desirable traits at a time when markets are punishing heavily indebted firms. Showing that is has some credibility as a near-term idea, FQAL is performing less worse than broader benchmarks this month and year-to-date.

To the point of emphasizing financially sound companies, several of FQAL’s top 10 holdings, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), are among the most cash-rich firms in Corporate America.

Fidelity MSCI Consumer Staples ETF (FSTA)

Expense ratio: 0.084% per year

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The coronavirus outbreak is prompting investors to revisit defensive sectors, and with large exposure to companies producing and retailing important virus-fighting products, such as Procter and Gamble (NYSE:PG), Walmart (NYSE:WMT) and others, consumer staples ETFs such as Fidelity MSCI Consumer Staples ETF (NYSEARCA:FSTA) are proving their mettle.

Staples equities aren’t perfect. FSTA is lower this month and this year, but it’s performing far less poorly than the broader market.

Additionally, the Fidelity fund’s 2.68% dividend yield is far higher than what investors will find on most government bond funds these days and plenty of FSTA’s 89 holdings exhibit low volatility or quality traits or both.

Fidelity High Dividend ETF (FDVV)

Expense ratio: 0.29% per year

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Due to the aforementioned low interest rates, high dividend strategies are receiving renewed attention from income investors, but the ETFs in this category aren’t all cut from the same cloth. When it comes to the Fidelity High Dividend ETF (NYSEARCA:FDVV), that’s a good thing. FDVV isn’t just one of the best Fidelity ETFs, it’s one of the better funds in the high dividend category.

One of the reasons that’s the case is FDVV features a tolerable 7.81% weight to the energy sector, one of the epicenters of negative dividend action this year. Second, FDVV devotes almost 20% of its weight to technology stocks, including names such as Apple and Microsoft, that have plenty of cash and are likely to offer some dividend growth this year despite the challenging economic backdrop.

FDVV has a dividend yield of 4.40% and while that’s clearly above-average, it doesn’t imply that the fund is chock full of likely dividend offenders. Given the fund’s roughly 55% combined weight to technology, financial services and consumer staples stock, dividend growth is probable with this fund in 2020.

Fidelity Stocks for Inflation ETF (FCPI)

Expense ratio: 0.29% per year

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The Fidelity Stocks for Inflation ETF (CBOE:FCPI) is one of the newest Fidelity ETFs, having debuted last November. FCPI’s utility, at least for now, can be debated because economists and the Federal Reserve consistently say inflation in the U.S. is low. However, U.S. inflation data typically excludes goods, such as food and energy.

And let’s be honest. Healthcare costs are rising with no end in sight, and costs for other consumer goods are higher today than they were, say, five or 10 years. Said another way, economists can say inflation is muted but consumers know otherwise.

Even for those that want to engage in the inflation debate, FCPI could prove useful it is loaded with quality stocks from sectors that, historically, respond positively to higher inflation. Home to 102 stocks, FCPI allocates 54% of its combined weight to the technology, healthcare and consumer staples sectors.

Fidelity MSCI Information Tech ETF (FTEC)

Expense ratio: 0.084% per year

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No sector has been immune to the market’s March meltdown, but technology is holding up relatively well, indicating the Fidelity MSCI Information Tech ETF (NYSEARCA:FTEC) could be worth considering now that it’s trading 24.18% below its 52-week high.

FTEC, the least expensive technology ETF on the market, allows investors to access an ETF proxy on Apple and Microsoft as those stocks combine for 36% of the fund’s weight. With a roster led by those two tech titans, FTEC is underpinned by quality companies with massive cash stock piles, a recipe that’s ideal for these volatile times.

FTEC follows the MSCI USA IMI Information Technology Index, a different beast than the S&P 500 Technology Index. FTEC holds nearly 320 stocks, giving it a deeper bench than rival cap-weighted tech ETFs.

Fidelity Small-Mid Factor ETF (FSMD)

Expense ratio: 0.29% per year

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As its name implies, the Fidelity Small-Mid Factor ETF (NYSEARCA:FSMD) combines mid- and small-cap exposure, helping investors fill in some of blanks associated with traditional large-cap equity funds. Just a few weeks past its first birthday, FSMD follows the Fidelity Small-Mid Factor Index.

That index “is designed to reflect the performance of stocks of small and mid-capitalization U.S. companies with attractive valuations, high quality profiles, positive momentum signals, and lower volatility than the broader market, as represented by the Fidelity U.S. Extended Investable Market Index,” according to Fidelity.

FSMD holds nearly 600 stocks, which is more than what a typical mid-cap ETF features and comparable to the rosters of many small-cap ETFs. The fund also has a lower beta and below-average fee relative to competing products in this category.

Over 45% of FSMD’s holdings hail from the technology, industrial and healthcare sectors and mover 55% of the fund’s components are small caps.

Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/04/the-7-best-fidelity-etfs-tactical-investors-should-buy-now/.

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