Fidelity High Yield Factor ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The management team has made an effort to align its interests with shareholders by investing alongside them, which helps it earn an Above Average People Pillar rating. The strategy merits an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight BB rated bonds and corporate bonds compared with category peers. 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

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Fidelity High Yield Factor ETF earns an Average Process Pillar rating.    The most meaningful contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 64%. 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. Strong risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the experience of the management team, which averages three years at this fund.

 Compared with other funds in the High Yield Bond Morningstar Category, this fund holds a similar cash position over the past few years. 

 This strategy's 12-month yield is 6.5%, which is near its average peer. Plus, it has a 7.0% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

Average

Process

Fidelity High Yield Factor ETF earns an Above Average People Pillar rating. The strategy is backed by Michael Cheng, the longest-tenured manager, who has been a listed portfolio manager for six years. The strategies they currently manage have an average Morningstar Rating of 3.0 stars, demonstrating average risk-adjusted performance compared with category peers. Although the team size is solid, together they are largely unproven. With three additional supporting listed managers, the team averages three years of listed portfolio management experience.  Portfolio managers have made only a small personal investment in the fund, with the maximum investment by any one manager being between $10,000 and $50,000. That isn't sufficient to align their interests with those of the strategy's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. At least one of the managers on this fund manages a different product rated by an analyst. The analyst-assigned People Pillar rating(s) for these managers are combined with algorithmic scores for any non-covered managers on a tenure-weighted basis.

Above Average

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 High Yield Factor ETF

FDHY is an actively managed fund using a quantitative screen to select high-yield bonds issued by US and foreign corporations. The fund seeks a high level of income, and may also seek capital appreciation.

The Fidelity High Yield Factor ETF offers exposure to corporate bonds through an actively managed strategy. The fund has outperformed peer benchmarks historically. Narrowing credit spreads and a resilient economic backdrop highlight tailwinds for this market segment into 2024.

FDHY: 7.5% Yield, Monthly Dividend From An Outperforming Corporate Bond ETF

Looking to add a high yield bond ETF to your portfolio? You wouldn't be alone.

Consider High Yield Bond ETF FDHY

FDHY is an actively managed high-yield corporate bond ETF. The fund offers investors a 6.0% dividend yield and an above-average performance track record. Fundamentals look somewhat weak right now, however. An overview of the fund follows.

FDHY: High-Yield Corporate Bond ETF, Uncompelling Value Proposition

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Recent uncertainty, instigated by the issues seen across the financial sector, has led to a change in investment flows seen across exchange traded funds. A change in investment flows can be seen over the month of March as equity market volatility has increased.

ETF Flows, The Winners And Losers In Volatile Markets

FDHY provides exposure to high-yield corporate bonds rated BB and B. Although it has a limited history, the FDHY ETF has performed better than its more well-known peers HYG and JNK.

FDHY: Worth A Look Vs. HYG And JNK

Bond yields are rising across the board. FDHY is a particularly strong, high-yielding bond ETF, and a buy.

FDHY: Strong High-Yield Corporate Bond ETF, 7.4% Yield, Solid Performance Track Record

The Fidelity High Yield Factor ETF invests in High Yield bonds, commonly referred to as "junk". Investors earn more for taking on the greater default risk these bonds have. FDHY is the smallest of the four straight HY ETFs I found and best performer. This article provides some comparisons between these four.

FDHY: Looking Heavenly Appears To Be A Better Option

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BOSTON--(BUSINESS WIRE)-- #ETF--Fidelity Investments launches new active fixed income ETF, Fidelity Preferred Securities & Income ETF.

Fidelity® Expands ETF Suite With Launch of Fidelity Preferred Securities & Income ETF

Active management helps provide investors with dynamic capital allocation, and with the Fidelity High Yield Factor ETF (FDHY) that strategy can be applied to high yield debt. As the world continues to conduct Covid-19 vaccinations, more investors are turning up the risk dial.

As Yields Begin to Rise, Consider This Active Factor ETF

The best high-yield bond ETFs for Q2 2021 are FALN, ANGL, and FDHY.

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These Fidelity funds are some of the best from the issuer's expansive lineup. Here's what investors should know about each.

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The best high-yield bond ETFs for Q4 2020 are FALN, ANGL, and FDHY.

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As money managers consider expanding into actively managed ETFs, investors will be able to access more time-tested strategies to potentially better navigate market shifts.

News for Fidelity High Yield Factor ETF ETF (FDHY)