FELV Profile
The Fidelity Covington Trust - Enhanced Large Cap Value ETF is designed to seek capital growth by focusing on stocks that are part of the Russell 1000 Value Index. This index represents a broad spectrum of the largest U.S. companies characterized by value-oriented traits. These value stocks are generally distinguished by lower valuations relative to their earnings, assets, or sales and are often perceived as undervalued by the market. By investing primarily in these value stocks, the fund aims to capitalize on their potential for appreciation and generate returns that exceed those of the Russell 1000 Value Index.
The ETF employs a sophisticated computer-aided quantitative analysis system to guide its investment decisions. This approach involves evaluating various financial metrics such as past growth, intrinsic value, and profitability of potential investments. The goal is to identify stocks that may offer superior returns compared to the index by focusing on those with favorable valuations and growth prospects. This methodical, data-driven strategy is designed to enhance the fund’s performance by selecting undervalued companies with the potential for significant capital appreciation.
While the Fidelity Covington Trust - Enhanced Large Cap Value ETF primarily concentrates on U.S. value stocks, it also retains the flexibility to invest in international stocks. This global exposure allows the fund to diversify its holdings beyond domestic equities, potentially capturing additional growth opportunities and further enhancing returns. Additionally, the fund may engage in securities lending to generate extra income, which contributes to its overall yield and performance.
Originally a mutual fund, FELV transitioned to an actively managed ETF structure, managing approximately $1.77 billion in assets. This conversion allows the fund to benefit from the liquidity and flexibility of the ETF format while continuing to leverage its proven value-oriented investment strategy. The Enhanced Large Cap Value ETF is suitable for investors seeking a disciplined approach to capital growth through value investing, with a focus on undervalued large-cap stocks both domestically and internationally.
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