FMDE Profile
The Fidelity Covington Trust - Enhanced Mid Cap ETF (FMDE) aims to achieve capital appreciation by investing primarily in common stocks included in the Russell Midcap Index. This benchmark index is a market capitalization-weighted gauge that represents the mid-cap sector of the U.S. equity market, focusing on companies with market capitalizations typically ranging from $2 billion to $10 billion. The ETF seeks to provide investors with exposure to this segment of the market, which is often characterized by its potential for higher growth compared to large-cap stocks.
FMDE employs a sophisticated computer-aided, quantitative analysis approach to stock selection. This method evaluates various factors such as historical valuation, growth metrics, and profitability to identify stocks that may offer superior returns. The fund's investment strategy is designed to potentially outperform the Russell Midcap Index by selecting a diversified portfolio of mid-cap stocks that the adviser believes have strong growth prospects and favorable investment characteristics.
In addition to focusing on capital growth, FMDE also incorporates securities lending as part of its strategy to generate additional income. This practice involves lending out portfolio securities to other institutions in exchange for a fee, which contributes to the fund's overall returns. This income-generating strategy is intended to enhance the fund’s performance while managing risk through diversification.
FMDE transitioned from its previous structure as the Fidelity Mid Cap Enhanced Index Fund to an actively managed ETF, with an initial net asset value of $1.33 billion. This conversion allows for a more dynamic management approach, leveraging the flexibility of the ETF structure to adapt to market conditions and capitalize on emerging opportunities in the mid-cap sector.
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