7 Best Fidelity ETFs Of May 2024 (2024)

The Fidelity MSCI Information Technology Index ETF invests only in technology sector stocks. And that sector has sizzled for the past decade. The Morningstar tech category has trounced the overall U.S. stock market by well over 20% in that span.

One reason this ETF has been among the top-most performers in its peer group has been its low annual expense ratio, roughly just one-tenth its peer group’s average.

While FTEC is wall to wall tech stocks, it does follow some risk control rules. FTEC’s benchmark is the MSCI USA IMI Information Technology 25/50 Index. One guardrail for the index and FTEC is that, at the end of each quarter, no more than 25% of the index or fund’s assets can be in a single stock. Another limitation involves stocks whose weights in the portfolio exceed 5%. The sum of those stocks’ weights cannot exceed 50% of FTEC’s total assets. If you want a high-octane tech fund, include FTEC in your search.

Launched in June 2021, the Fidelity Sustainable U.S. Equity ETF is a good choice for investors seeking an active management approach to ESG investing. The fund’s goal is long-term growth, with at least 80% of its holdings in U.S. companies that have strong ESG sustainability practices. The fund leans toward smaller, faster-growing firms, which can lead to a bit more volatility.

FSST’s benchmark is the Russell 3000 Index, a market-cap weighted index that tracks the 3,000 largest U.S. stocks. The fund’s top five sectors are technology, health care, financial services, consumer discretionary stocksand industrials. Among the 10 largest holdings are Microsoft (MSFT), Procter & Gamble (PG), Nvidia (NVDA) and Merck (MRK).

The Fidelity High Dividend ETF is a good pick for investors who want the cash flow and reinvestment opportunities that dividendscan provide. FDVV is a passively managed fund that aims to approximate the performance of the Fidelity High Dividend Index, which includes large- and mid-capdividend paying firms with both sustainable and growing payouts.

FDVV’s annualized returns beat its benchmark’s over the past one, three and five years. The fund’s top-10 holdings comprise about 30% of the fund’s portfolio. The bulk of holdings are large-cap companies. Top weighted positions include Apple, Microsoft, Exxon Mobil (XOM), Chevron (CVX), Coca-Cola (KO) and Caterpillar (CAT).

Investors who’d like portfolio insurance against large market drawdowns, like we saw in 2022 and in parts of 2020, might consider the Fidelity Low Volatility Factor ETF. During the previous five years, FDLO had a standard deviation of around 16 in contrast with that metric above 18 for the Morningstar large cap blend category of funds—FDLO’s peer group. That means FDLO had smaller ups and downs amid market volatility than its direct rivals on average. Meanwhile, FDLO’s dividend yield is higher than its peer group’s average.

So, FDLO has offered a smoother ride, comparable returns and higher income yield than its most avid competitors.

FDLO is predominantly a large-cap stock fund. Its top-10 holdings comprise roughly 30% of the portfolio. Those positions include Microsoft, Alphabet (GOOGL), Apple, UnitedHealth (UNH), Johnson & Johnson (JNJ), Visa (V) and Mastercard (MA).

Choosing a good bond fund in a rising interest rate environment can be tricky. That’s because when interest rates are increasing, bond values decline. The Fidelity Low Duration Bond Factor ETF attempts to counter this effect by investing only in bonds that mature within one year or less. That should limit bond price pullbacks while dividend yields climb amid rising interest rates.

More than 90% of FLDR’s bonds carry credit ratingsof AAA, AA or A. Around 80% are corporate bonds with only about 10% government issues. (Most of the balance consists of cash or equivalents.) Investors looking for capital preservation and diversification might consider FLDR as part of their cash and fixed income allocation. An alternative for this category might be a money market fund, which offers lower current yields but stable value.

Climate change and high crude oil prices suggest that the demand for electric vehicles (EVs) will likely increase over the long term. Just be aware that sector investing is riskier than choosing broadly diversified ETFs, and can lead to greater losses should a market sector suffer declines.

Launched in October 2021, the Fidelity Electric Vehicles and Future Transportation ETF is concentrated with only about 60 holdings, mainly stocks. FDRV’s top 10 account for roughly 35% of the portfolio. The passively managed fund benchmarks its performance against the Fidelity Electric Vehicles and Future Transportation Index.

Top holdings include Tesla (TSLA), Analog Devices (ADI), NXP Semiconductors (NXPI), Infineon Technologies (IFNNY) and Aptiv (APTV). Investors who believe in the future of EVs and energy efficient transportation might add a sliver of FDRV to an already diversified portfolio.

The Fidelity MSCI Real Estate Index ETF is a low-fee, passively managed real estate investment trust (REIT) fund that tracks the MSCI USA IMI Real Estate Index. Although rising interest rates can hurt fixed income investors, inflation can help grow real estate prices. Since REITs are required to pay out at least 90% of their taxable income to shareholders in the form of dividends, you can expect a reliable income stream from FREL.

FREL’s annualized three- and five-year returns beat their Morningstar category’s averages. The top 10 holdings comprise more than 40% of the fund’s portfolio, and include REIT heavyweights like American Tower (AMT), Prologis (PLD), Crown Castle (CCI), Equinix (EQIX), Public Storage (PSA), Digital Realty (DLR) and Welltower (WELL).