Topic: How To Invest

Q: I have a question for you: what is the Inner Circle’s thinking on the new Fidelity Global Value Long/Short ETF? Thank you.

Article Excerpt

A: Fidelity Global Value Long/Short ETF, $8.98, symbol FGLS on the CBOE Canada Exchange (Units outstanding: 2.6 million; Market cap: $22.2 million; www.fidelity.ca) invests globally by taking long positions in companies that the manager believes are undervalued; at the same time, it takes short positions in what it sees as overvalued companies. The ETF launched on February 1, 2024—the fund has operated as a mutual fund since October 2020. Overall, the fund, including all the share classes, holds $653.3 million in assets. The MER is high at 1.15%. The Fidelity Global Value Long/Short ETF’s top long holdings include Nestle, Johnson & Johnson, TMX Group, Metro and Diageo. Short positions include Carvana and Micro Strategy. To take its long and short positions, the ETF incurs added costs to buy derivatives, such as swap agreements or futures. That cuts into its overall returns. At the same time, the short positions vary, which means they may be insufficient to protect against a sudden, unexpected market drop. Hedge…