Fidelity Quality Factor ETF Flies Under the Radar
Investors will likely benefit from a "flight to quality" in 2022 and this Fidelity fund offers higher rewards and lower risk than its peers.
![single lit bulb in group of light bulbs](https://cdn.mos.cms.futurecdn.net/nbrTjQnAvrpp8wnPG6MAwD-415-80.jpg)
When the market gets rough, you hear a lot about a "flight to quality."
In the stock market, that means companies that have a lower risk profile thanks to traits such as dependable earnings, strong balance sheets, plump dividends or lower-than-average trading volatility, for example.
"Given the likely slowing industrywide for earnings growth in 2022, we think investors will benefit from a diversified basket of higher-quality companies," says Todd Rosenbluth, head of ETF and mutual fund research at CFRA.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Fidelity Quality Factor ETF (FQAL) tracks a proprietary index designed to home in on stocks with a higher-quality profile than the broad market.
The index measures how efficient a company is at converting sales to cash, how much profit it generates with the assets invested by stock and bond holders, and how consistently it can generate positive free cash flow (cash profits left after investing to maintain and expand the business). The approach differs from that of funds that overweight a particular sector, say, or focus mostly on debt levels.
The exchange-traded fund has a higher expense ratio than many of its peers, but its returns are competitive.
With just under $260 million in assets – compared with billions for similar offerings iShares MSCI USA Quality Factor ETF (QUAL) and Invesco S&P 500 Quality ETF (SPHQ), for example – the Fidelity fund "is an under-the-radar quality ETF," says Rosenbluth, with a "higher reward potential and less risk than its high-quality peers and the broader U.S. market."
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Stock Market Today: Stocks Tumble on Disappointing Big Tech Earnings
Poorly received quarterly results from Alphabet and Tesla sparked a steep selloff in equities.
By Dan Burrows Last updated
-
Stock Market Today: Mega-Cap Tech Rallies to Drag Markets Higher
Markets focused on upcoming earnings from Magnificent 7 stocks rather than chaos in D.C.
By Dan Burrows Published
-
Stock Market Today: Stocks Tumble After Spectacular Global Internet Crash
Market participants rushed out of risk assets to end a wild week of trading.
By Dan Burrows Published
-
Stock Market Today: Dow Sinks 533 Points as Big Banks, Mega Caps Slump
Goldman Sachs and Apple were two of the worst-performing blue chip stocks on Thursday.
By Karee Venema Published
-
Stock Market Today: Semis Get Slammed and Blue Chips Bounce
The potential for more curbs on tech sales to China set off a rotation into blue chips.
By Dan Burrows Published
-
Stock Market Today: Dow Spikes 742 Points After UnitedHealth Earnings
The S&P 500 and Nasdaq also scored wins Tuesday albeit with much smaller gains than the blue chip Dow.
By Karee Venema Published
-
Stock Market Today: Dow Adds 210 Points as Apple, Goldman Hit New Highs
A big rally in blue chips and some dovish Fed speak boosted the equities market Monday.
By Karee Venema Published
-
Stock Market Today: Markets Bounce Back on Rate-Cut Optimism
The latest readings on consumer sentiment and inflation helped lift the odds of the Fed easing in September.
By Dan Burrows Published