Fidelity International has announced its new Equity Enhanced Yield Exchange Traded Fund (ETF) range, with the launch of the Fidelity Global Equity Enhanced Yield UCITS ETF and the Fidelity US Equity Enhanced Yield UCITS ETF.
The firm writes that the new range is designed to provide investors with a differentiated source of income while maintaining exposure to equity markets. The strategies combine actively managed equity portfolios that draw of Fidelity’s fundamental research insights, with an options strategy designed with the aim to generate additional income.
The new ETFs combine an actively managed equity portfolio with a systematic options overlay, bringing together Fidelity’s fundamental research capabilities with a rules-based approach to income generation. The equity portfolios incorporate insights from Fidelity’s global fundamental research platform into stock selection and portfolio construction, within a disciplined, risk-managed framework. The options overlay systematically sells index call options aiming to generate additional income. ESG factors are also considered when assessing investment risks and opportunities.
Each ETF will be supported by USD5m million of seed capital from authorised market participant Susquehanna.
Neil Davies, Head of ETFs at Fidelity International, comments: “As market volatility continues to challenge investors, we are seeing growing demand for strategies that can provide alternative sources of income while allowing investors to remain invested in equity markets.
“What differentiates this range is that it gives investors access to Fidelity’s bottom-up equity research in a systematic way. Alongside this, a disciplined, rules-based options strategy seeks to provide an additional source of income, with the option premiums also helping to cushion some of the impact of market declines.”
Vincent Li, Head of Derivatives at Fidelity International, comments: “Options can be a powerful tool for reshaping the return profile of an equity investment. Our approach is deliberately systematic, using a disciplined framework to select and implement index call options with the aim of generating consistent additional income, while retaining meaningful participation in equity markets.”
