Fidelity Investments has expanded its exchange-traded fund lineup with two new factor ETFs, the firm announced Thursday.
The Fidelity Low Duration Bond Factor ETF (FLDR) follows the Fidelity Low Duration Investment Grade Factor Index comprised of U.S. investment-grade corporate floating rate notes with less than 5 years maturity and U.S. Treasury notes with 7 to 10 years maturity.
According to the fund's prospectus, the weight of each component within the corporate note/U.S. Treasury note blend is set to target a duration that seeks to optimize the balance of credit risk and interest rate risk. The final weights of securities within the corporate floating rate notes component are determined by their market capitalization, subject to an issuer cap of 3.5 percent.
FLDR's expense ratio is 0.15 percent.
The Fidelity High Yield Factor ETF (FDHY) uses the ICE BofAML BB-B US High Yield Constrained Index as a guide in structuring the fund and selecting its investments in the junk bond market.
As per the prospectus, the fund employs a proprietary multifactor quantitative model to systematically screen more than 1,000 bonds and select those with strong return potential and low probability of default using a value and quality factor-based methodology.
FDHY's expense ratio is 0.45 percent.
Fidelity currently has more than $380 billion in ETF assets under administration. The two newest funds are available commission-free to individual investors and financial advisors through Fidelity’s online brokerage platforms.
The company now offers 95 commission-free ETFs, including 10 Fidelity factor ETFs, three Fidelity actively managed bond ETFs, 11 Fidelity passive equity sector ETFs, Fidelity ONEQ, and 70 passive iShares ETFs.