There were five new ETF offerings launched for the week, each with a distinct value proposition for investors. Detailed below are the respective launches from each asset manager.
Fidelity Investments launched three actively managed liquid alternative ETFs. The new options-based equity strategies seek to offer risk mitigation, volatility reduction, or yield enhancement in a familiar ETF wrapper, backed by Fidelity’s legacy of active management.
Fidelity Dynamic Buffered Equity ETF (Ticker: FBUF) will invest in equity securities of companies with market capitalisations generally similar to companies in the S&P 500 Index. The ETF combines call-writing and put-buying overlays to create a dynamic “collar” overlay. The resulting strategy is defencive; it aims to provide good downside protection but may give up some upside participation.
Fidelity Hedged Equity ETF (Ticker: FHEQ) will invest in equity securities of companies with market capitalisations generally similar to companies in the S&P 500 Index. The ETF aims to protect against sudden and meaningful market drawdowns, while still participating in sharp market rallies, by buying put options at various expiries and strikes. Because this strategy strictly buys protection, it may lag the market if there is low volatility or the market moves sideways.
Fidelity Yield Enhanced Equity ETF (Ticker: FYEE) will invest in equity securities of companies with market capitalisations generally similar to companies in the S&P 500 Index. The ETF seeks to deliver an attractive distribution yield by harvesting option premia from dynamic covered call writing. In exchange for the benefit of the higher distribution yield, there is an upside cap on equity portfolio performance if the market rallies above the call option strike price.
Strive Asset Management launched the Strive Mid-Cap ETF (Ticker: STXM), which primarily invests in midcap companies. The ETF employs an indexing approach to try and match the performance of the Bloomberg US 400 Index; the average market cap of the index is sitting at USD9.3 billion as of December 31, 2023. The fund does not try to outperform the index in particular, neither does it seek defencive positions during foul market periods.
Simplify Asset Management launched two ETFs that focus on Intangible Capital, the Simplify NEXT Intangible Core Index ETF (Ticker: NXTI) and Simplify NEXT Intangible Value Index (Ticker: NXTV). The NXTI seeks to provide investment results that track the performance of the NEXT Intangible Core Index, which reflects companies with high intangible capital-to-book asset ratios within their respective sector. The research behind the development of the index supports the idea that companies with high intangible capital-to-book asset ratios outperform companies with low intangible capital-to-book asset ratios over time.
NXTV seeks to provide investment results that track the performance of the NEXT Intangible Value Index, which reflects companies with low equity valuations relative to their intangible-adjusted book values within their respective sectors. The research behind the development of the index supports the idea that companies with low intangible-adjusted book valuations outperform traditional valuation metrics over time.
This article is sponsored by STOXX.
To view the Canadian ETF launches for March, click here.
To view the Global ETF launches for April 11th to 18th, 2024, click here.