The actively managed ETF market continues to experience strong growth. The assets managed by these products have grown by 50% so far this year, totaling nearly €50 billion in the region. In response to increasing demand, Fidelity International (Fidelity) has expanded its range of actively managed sustainable ETFs with the launch of two new fixed-income ETFs.
According to the asset manager, these funds are the Fidelity Sustainable EUR High Yield Bond Paris-Aligned Multifactor UCITS ETF and the Fidelity Sustainable USD High Yield Paris-Aligned Multifactor UCITS ETF. Both have begun trading on Xetra and will soon be listed on the London Stock Exchange, SIX, and Borsa Italiana. These new vehicles complement the Fidelity UCITS II ICAV – Fidelity Sustainable Global High Yield Bond Paris-Aligned Multifactor UCITS ETF, launched in November 2022, which already holds $800 million in assets. Additionally, both ETFs are classified under Article 9 of the Sustainable Finance Disclosure Regulation (SFDR).
Supported by Fidelity’s quantitative, fundamental, and sustainability analysis, these funds invest primarily in a portfolio of high-yield, lower-credit-quality (sub-investment-grade) corporate debt from global issuers. Their objective is to generate income and capital appreciation, aligning with the long-term goals of the Paris Agreement by limiting carbon emissions exposure within their respective portfolios, according to Fidelity.
The funds are structured and adjusted using Fidelity’s proprietary multifactor model, based on its extensive quantitative analysis of fixed-income and data. According to the asset manager, this model aims to systematically generate alpha throughout the market cycle while preserving the essential characteristics of the asset class. It is designed to achieve superior returns by investing based on quantitative signals (factors) to identify outstanding issuers, while applying strict considerations regarding transaction costs.
On the occasion of the launch, Alastair Baillie Strong, head of ETFs at Fidelity International, stated, “By leveraging Fidelity’s extensive research resources and internally developed investment insights, we can offer our clients a range of actively managed ETFs with unique positioning that provides enhanced exposures compared to products that simply replicate indices, all at an attractive price. Since their launch in 2021, our sustainable ETFs have been well received by clients and have accumulated over $5.7 billion in assets across 13 different active strategies to date.”
