Fidelity International launches two active ETFs forming the new Fundamental Equity ETF range providing access to Fidelity Investments’ highest-conviction US equity fundamental research ideas, delivered systematically.
The Fidelity US Fundamental Small-Mid Cap UCITS ETF is the first Irish-domiciled UCITS ETF in Europe to use the semi-transparent UCITS structure recently approved by the Central Bank of Ireland .
Both ETFs list on Germany’s Xetra today (3 September) and the UK’s LSE tomorrow (4 September), with further listings in Italy and Switzerland to follow. Fidelity International today announces the expansion of its industry-leading active ETF offering in Europe with its new high-conviction Fundamental Equity ETF range. The range launches with two new products, the Fidelity US Fundamental Large Cap Core UCITS ETF and Fidelity US Fundamental Small-Mid Cap UCITS ETF.
“In Europe, the initial wave of active ETFs took the form of benchmark-aware enhanced strategies, but investors are now looking to complement that with higher-conviction strategies. This launch seeks to meet this demand by leveraging proprietary Fidelity Investments’ research through an ETF wrapper” said Neil Davies, Head of ETF Product & Capital Markets for Europe and Asia Pacific at Fidelity International. “We believe higher-conviction ETFs have the potential to drive the next phase of growth in the European ETF market.”
The ETFs are sub-advised by Fidelity Investments, a separate U.S.-based company, and are now available to clients of Fidelity International through its Irish UCITS ETF range. The Fundamental Equity ETF range provides access to Fidelity Investments’ highly regarded active management and bottom-up research capabilities across the US equity investment universe. These systematic active strategies employ consistent and repeatable processes that is designed to extract and combine the highest-conviction investment ideas from multiple Fidelity Investments portfolio managers into single strategies.
The Fidelity US Fundamental Small-Mid Cap UCITS ETF is the first Irish-domiciled UCITS ETF in Europe to employ the principles-based semi-transparent structure recently approved by the Central Bank of Ireland . This structure is designed to allow ETF providers to meet client demand for ETFs that incorporate high value research by also allowing them to protect their active research intellectual property. The ETF seeks long-term growth, primarily investing in securities with small to medium market capitalisations (which, for purposes of this fund, are those US companies with market capitalisations similar to companies in the Russell 2500 Net of 30% Tax Index) while remaining unconstrained to any particular investment style.
The Fidelity Fundamental Large Cap Core UCITS ETF seeks long-term growth of capital, primarily investing in equity securities of US companies with large market capitalisations (which, for the purposes of this fund, are those US companies with market capitalisation similar to companies in the Russell 1000 Index or the S&P 500 Index). The ETF is not constrained by any particular investment style and is fully transparent, disclosing full holdings daily.
Both ETFs listed with a EUR trading line on Xetra on 3 September, with further USD and GBP listings on the London Stock Exchange on 4 September). Additional SIX and Borsa Italiana listings are to follow.
Neil Davies, adds: “By employing Fidelity Investments’ active expertise in a risk-aware manner, these higher-conviction ETFs provide greater opportunity for alpha while still allowing investors to enjoy many of the core benefits of the ETF wrapper, such as the ability to trade throughout the day.”
“Following the success of our existing Research Enhanced Equity and Fixed Income ETF ranges, these higher-conviction active Fundamental ETFs offer complementary solutions with potential to deviate further from the benchmarks to pursue greater levels of alpha. This offers clients increased choice when seeking to meet their objectives and/or diversify their portfolios.” “Since launching our ETF platform in 2017, Fidelity International has become the second-largest active ETF provider* in Europe by AUM. We continue to look for opportunities to grow and innovate our product suite by adding strategies that help meet the evolving needs of investors.”
Fidelity International is currently the second-largest provider of active ETFs in Europe with $8bn in AUM*, with total ETP platform AUM of $11.2bn**. With these additions, its ETF range consists of 23 products, including 8 actively managed equity ETFs, 8 fixed income ETFs and 6 differentiated index ETFs.
