A strong management team and sound investment process underpin Fidelity Enhanced Large Cap Value ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The longest-tenured portfolio manager's extensive experience drives the strategy's High People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Berkshire Hathaway Inc. - Ordinary Shares - Class B

JPMorgan Chase & Co

Exxon Mobil

Bank of America

Walmart

Procter & Gamble

Johnson & Johnson

Pfizer

Merck

Intel

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Fidelity Enhanced Large Cap Value ETF earns an Above Average Process Pillar rating. 

The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 66%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's impressive risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also bolsters the process. Lastly, the process is limited by the parent firm's five-year retention rate of 73%, which suggests it could do more to retain its portfolio managers.

 This strategy prefers smaller market-cap companies compared with the average fund in its peer group, the Large Value Morningstar Category.  But in terms of style (value/growth) exposure, it is similar. Analyzing additional factors, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In recent months, the strategy also had less Yield factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in financial services by 3.6 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are utilities and healthcare; however, the allocations are similar to the category. The strategy owns 317 securities and is less top-heavy than peers. Specifically, 18.2% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the typical peer's 28.0%.

Above Average

Process

Fidelity Enhanced Large Cap Value ETF earns a High People Pillar rating. The main contributor to the rating is its parent firm's five-year success ratio of 64%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The combined average five-year excess return of each manager also influences the rating. It indicates that the funds they manage have exceeded the average manager. Management team experience, which averages 19 years at this fund, reinforces the rating as well.


None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

High

People

Fidelity earns an Above Average Parent rating because of its ability to stay ahead of its competition.

The firm's successful stock-picking mutual funds fueled its rise to prominence, and it has adapted well to investor preferences that have shifted markedly over the past two decades. Index funds and exchange-traded funds have garnered most of the industry's flows as money has gushed from actively managed products—Fidelity's included. Yet overall, the asset-management division has continued to achieve positive organic growth by introducing or maintaining aggressive pricing on its own suite of passively managed funds and expanding its menu of client-demanded investment structures, such as managed accounts and collective investment trusts. These moves are made possible by the firm's strong distribution network, scale, established brand, and willingness to tolerate losses on some products in pursuit of broader strategic objectives.

The firm is not without blemishes. It could stand to rationalize its lineup of active equity funds and do better to maintain continuity in an equity fund's portfolio construction as the fund's leadership inevitably changes.

Overall, the firm has served its funds' investors well. It boasts a topnotch fixed-income division and remains home to some of the industry's most talented equity managers and a strong team supporting its well-run target-date series.

Parent

Fidelity Enhanced Large Cap Value Etf

FELV is actively managed, investing in large-cap value stocks belonging to a broad US equity value index. The fund aims for growth of capital.

Fidelity Enhanced Large Cap Core ETF

Fidelity Enhanced Large Cap Growth ETF

Fidelity Enhanced International ETF

Fidelity Enhanced Small Cap Etf

Fidelity Enhanced Mid Cap Etf

A plethora of strategies exist for investors looking for core equity exposure, but investors may want to consider the Fidelity Enhanced ETF equity suite. These ETFs, converted from mutual funds last November, carried over 15 years of trading for the strategies while seeking to outperform their various benchmarks.

The Potential Benefits of Fidelity's Enhanced ETF Core Equity Suite

Last year saw active investing take the ETF universe by storm. From the ETF rule's arrival back in 2019 to a growing trend of mutual fund conversions, active ETFs have gained significant interest with their goal to navigate volatility and seek outperformance.

Beyond Index Investing – Seeking Enhanced Outcomes Through Large Cap ETF FELC

Fidelity Investments has completed six mutual-fund-to-ETF conversions, bringing its total ETF roster to 64 total ETFs.

Fidelity Launches Six Active Equity ETF Conversions

BOSTON--(BUSINESS WIRE)--Fidelity announced the launch of six new active equity ETFs and reduced pricing on factor ETFs.

News for Fidelity Enhanced Large Cap Value Etf ETF (FELV)