On May 25th, Fidelity Investments made further inroads into the Canadian ETF market with the launch of four ETFs on the Cboe Canada exchange as part of the firm's Fidelity Active ETFs and ETF Series lineup.
“We’re excited to offer this suite of Fidelity Active ETFs supported by Fidelity's world class fundamental research resources and portfolio management capabilities,” said Andrew Clee, Vice President, Product, Fidelity. “These products can support financial advisors and investors looking for investment solutions that combine the flexibility of an ETF structure with the strong long-term performance potential of active management.”
This move expands on Fidelity's existing Canadian ETF range, which includes numerous funds such as the Fidelity Advantage Bitcoin ETF (FBTC) and the Fidelity All-in-One Growth ETF (NLB:FGRO). All four of the new funds will be available through online brokerages and financial advisors.
After a volatile market environment in 2022, actively managed ETFs are once again on the radar for many Canadian investors seeking to outperform indices that saw high losses. Fidelity's new lineup of actively managed ETFs will help provide broad coverage across a variety of equity geographies, sectors, styles, and sizes. Here’s a quick overview of each ETF and what you need to know as an investor.
Fidelity Global Innovators ETF (FINN)
FINN targets "disruptive innovators" from any market cap size, geography, and industry. Fidelity defines this as companies that produce innovative technologies, use new technologies to disrupt markets, are leaders in emerging industries, or use innovation to gain a competitive edge. This ETF charges a 0.85% management fee and comes in both currency unhedged Canadian and U.S. dollar-denominated versions.
FINN is classic active management, with Fidelity's team engaged in bottom-up analysis that assesses a company's financial condition, industry condition, growth potential, earnings estimate, management quality, and valuation, among other factors. Unique to FINN is the ability to invest in private companies and take a defensive position during a market downturn by holding cash or fixed-income assets.
Fidelity Greater Canada Fund (FCGC)
FCGC offers a spin on investing in Canadian equities with the ability to allocate up to 49% of its portfolio to international stocks. This ETF employs a contrarian strategy that attempts to target stocks identified by Fidelity as being undervalued and out of favour. As noted earlier, this ETF can venture outside of the Canadian market to actively target attractively valued international stocks.
FCGC may appeal to Canadian investors looking for an actively managed portfolio of diversified equities. Unlike index ETFs, FCGC can tactically shift its investment mix, sector, or geographical representation as the manager deems fit to exploit opportunities or avoid risk. Like FINN, FCGC will charge a 0.85% management fee, with the overall expense ratio to be determined (as of June 9, 2023).
Fidelity Canadian Large Cap Fund (FCLC)
Investors looking for an actively managed large-cap-focused holding may like FCLC, which offers a similar strategy to FCGC, but for large-cap stocks only. Again, this ETF primarily holds Canadian equities but has the ability to shift up to 49% of its asset allocation into international equities. The ETF will focus on both undervalued stocks and low-volatility large-cap stocks.
FCLC's mutual fund equivalent's portfolio snapshot as of March 31st has numerous Canadian consumer staples and telecommunications stocks in its top holdings, such as Alimentation Couche-Tarde, Metro (TSX:MRU), Rogers Communications (TSX:RCIa), and Loblaw (TSX:L), highlighting its value and low-volatility oriented strategy. Like the previous ETFs, FCLC will also charge a 0.85% management fee.
Fidelity Global Small Cap Opportunities Fund (FCGS)
Small-cap factor investors looking for a globally diversified option may find FCGS particularly attractive. This ETF actively selects a portfolio of global small-cap equity securities with market caps similar to the metrics of the MSCI All Country World Small Cap Index. In addition, Fidelity will focus on companies that they believe have either under-reacted to positive change or overreacted to negative change.
Before FCGS, Canadian small-cap investors looking to go global had to make do with cobbling together various country-specific small-cap ETFs to meet their needs. With FCGS, global small-cap investors now have an actively managed one-stop shop for a 0.85% expense ratio. The ETF comes in both currency unhedged Canadian dollar and U.S. dollar-denominated versions.
This content was originally published by our partners at the Canadian ETF Marketplace.