Fidelity Investments has announced the launch of four thematic equity ETFs on Cboe BZX Exchange.
Greg Friedman, Head of ETF Management and Strategy, Fidelity Investments.
The funds are linked to proprietary, in-house indices, and provide exposure to the clean energy, cloud computing, digital health, and electric vehicles and future transportation investment themes.
The funds have a global mandate and invest across all parts of the market capitalization spectrum. They each come with total annual operating expenses of 0.39%.
With this launch, Fidelity now offers 46 ETFs with more than $30.6 billion in assets under management.
“Thematic investing is a significant growth area as investors increasingly look for opportunities to enhance their portfolios and align their investments with their values and personal passions,” said Greg Friedman, Fidelity’s Head of ETF Management and Strategy.
“We continue to look for ways to leverage our investment expertise and investor insights to offer a wide array of innovative ETFs.”
Proprietary indices
The underlying indices have been developed by Fidelity’s quantitative research and investment team, and use a combination of company revenue data and natural language processing (NLP) to select the companies in each index.
NLP is used to analyse text-based documents to identify companies with relevant keywords associated with business activities linked to the theme. Stocks are then assigned a thematic relevancy score and those with the highest scores are selected for inclusion in the index.
Companies must typically generate at least 50% of their total revenue from business activities relevant to the theme to be eligible for inclusion. Stocks of companies with less than 50% of their total revenue from relevant business activities may also be included in the index if an insufficient number of companies meet the 50% revenue threshold.
Each stock is weighted by adjusted market capitalization and is subject to passing an environmental, social, and governance controversy screen. The indices are rebalanced quarterly.
The funds
The Fidelity Clean Energy ETF (FRNW US) tracks the Fidelity Clean Energy Index. The index reflects the performance of a global universe of companies across the market capitalization spectrum that distribute, produce or provide technology or equipment to support the production of energy from solar, wind, hydrogen and other renewable sources.
The Fidelity Cloud Computing ETF (FCLD US) tracks the Fidelity Cloud Computing Index. This index is designed to reflect the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the delivery of computing services over the internet.
The Fidelity Digital Health ETF (FDHT US) tracks the Fidelity Digital Health Index and is designed to reflect the performance of a global universe of companies across the market capitalization spectrum providing healthcare records management, connected healthcare devices, surgical robotics, telemedicine, and other technology-enabled healthcare products and services.
The Fidelity Electric Vehicles and Future Transportation ETF (FDRV US), meanwhile, tracks the Fidelity Electric Vehicles and Future Transportation Index. This index is designed to reflect the performance of a global universe of companies across the market capitalization spectrum engaged in the production of electric and/or autonomous vehicles and their components, technology, or energy systems or engaged in other initiatives that aim to change the future of transportation.