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Fidelity Expands ESG Fund Lineup

By Jeff Berman

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What You Need to Know

  • Fidelity Investments has introduced four new ESG funds, including three mutual funds and one ETF.
  • The new solutions increase Fidelity's ESG lineup of actively managed and index sustainable mutual funds and ETFs to 15.
  • The new ESG funds have no minimum investment and are available for advisors and individual investors to buy commission-free.

Fidelity Investments has introduced four new environmental, social and governance funds, expanding its lineup of actively managed and index sustainable mutual funds and exchange-traded funds to 15, it said Thursday.

The new ESG funds are the Fidelity Sustainable International Equity Fund (FSYRX), Fidelity Sustainable Emerging Markets Equity Fund (FSYJX) and Fidelity Sustainable Multi-Asset Fund (FYMRX) mutual funds, listed on the Nasdaq, and the Fidelity Sustainable High Yield ETF (FSYD, with a net expense ratio of 0.55%) on the NYSE Arca.

The new sustainable mutual funds and ETF have no minimum investment and are available for financial advisors and individual investors to buy commission-free on Fidelity’s online brokerage platforms.

A growing number of firms are jumping into the ESG space to meet increasing investor demand, while firms already offering such funds have increased their offerings in recent months. For example, Fidelity Investments said in June that it was launching five new actively managed funds focused on ESG factors — three mutual funds (two equity, one bond) and two active semi-transparent equity ETFs.

The Fidelity Sustainable International Equity Fund and Fidelity Emerging Markets Equity Fund will invest in companies with proven or improving sustainability practices in developed and emerging markets, respectively, Fidelity said.

The Fidelity Sustainable High Yield ETF will invest in high-yield debt securities of issuers that Fidelity believes have proven or improving sustainability practices, using a joint quantitative and fundamental investment approach to identify bonds with strong return potential and low probability of default, the company said.

The Fidelity Sustainable Multi-Asset Fund will invest in Fidelity’s actively managed and index sustainable funds and is designed for investors looking for a diversified fund with an emphasis on equities and long-term growth, according to the company.

The Fidelity Sustainable International Equity Fund will typically invest at least 80% of assets in equity securities of companies that Fidelity believes have proven or improving sustainability practices based on an evaluation of such companies’ indi­vidual ESG profile.

 The Fidelity Sustainable Emerging Markets Equity Fund will typically invest at least 80% of assets in equity securities of companies in emerging markets, including equity investments that are tied economically to emerging markets.

The Fidelity Sustainable High Yield ETF will typically invest at least 80% of the fund’s assets in debt securities rated below investment grade (high-yield debt securities or junk bonds). And the Fidelity Sustainable Multi-Asset Fund will typically invest at least 80% of assets in Fidelity funds, including mutual funds and ETFs.

Each of the three new mutual funds and one ETF is using Fidelity’s proprietary, forward-looking and historical ESG ratings frameworks, in addition to third-party ESG ratings to evaluate a company’s or issuer’s sustainable business practices, the company said.

“Fidelity’s ESG ratings build on our legacy of active management and quantitative capabilities, leveraging our global experience in corporate engagement and fundamental analysis,” according to Pam Holding, co-head of equity and head of sustainable investing at Fidelity Investments.

Fidelity Investments had assets under administration of $11.8 trillion, including discretionary assets of $4.5 trillion as of Dec. 31.

(Photo: Shutterstock)

Jeff Berman

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