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Fidelity Launches Another Active ETF, Its First Preferred Securities Product

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What You Need to Know

  • The Fidelity Preferred Securities & Income ETF (FPFD) trades on the Cboe and has a 0.59% expense ratio.
  • It is an actively managed ETF and brings Fidelity's total ETF count to 42.
  • The announcement comes a day after Fidelity announced the launch of five active, ESG-focused funds.

A day after it announced the imminent launch of five new actively managed funds, including two ETFs, Fidelity Investments introduced yet another active ETF, the Fidelity Preferred Securities & Income ETF (FPFD).

The ETF is Fidelity’s first standalone preferred securities product and seeks high total return through a combination of current income and capital appreciation by investing the bulk of its assets — at least 80% normally — in preferred securities and other income-producing securities.

“Investors continue to look for a range of fixed income solutions across duration and credit spectrums, and we remain committed to using our significant global investment management capabilities and scale to offer choice and value in this space,” said Greg Friedman, Fidelity’s head of ETF management and strategy.

Preferred securities are a hybrid product with attributes of both stocks and bonds, and they tend to pay higher coupons than bonds and dividend-paying stocks. They are primarily issued by financial companies, and their credit ratings tend to be at the lowest rung of investment grade (BBB) or slightly lower (BB).

The Fidelity Preferred Securities & Income ETF trades on the Cboe BZX exchange, is managed by Fidelity veterans Adam Kramer and Brian Chang, and has an expense ratio of 0.59%, the same fee as the ESG-focused ETFs announced Wednesday that also began trading Thursday.

In managing the new ETF, Kramer and Chang rely will primarily on fundamental research to identify preferred securities that may offer the best return potential within the portfolio’s investable universe and they will also utilize Fidelity’s High Income and Alternatives Research Team, according to Fidelity.

With this latest launch, Fidelity now has 42 ETFs — nine actively managed equity ETFs, six actively managed fixed income ETFs, 15 factor ETFs, 11 passive equity sector ETFs, and Fidelity ONEQ, the Fidelity Nasdaq Composite Index ETF. Its platform includes more than 2,000 commission-free ETFs available to clients.