Last week, on April 19, 2022, Fidelity launched two new thematic ETFs. These two ETFs are the Fidelity Crypto Industry and Digital Payments ETF (FDIG) and the Fidelity Metaverse ETF (FMET).
What are thematic ETFs? Per Fidelity, their thematic ETFs ‘allow you to invest directly in long-term trends and themes that may align with your interests by leveraging Fidelity’s global research capabilities.’ Fidelity currently has four other thematic ETFs, which cover the themes such of cloud computing (FCLD), clean energy (FRNW), digital health (FDHT), and electric vehicles and future transportation (FDRV). All four of these ETFs were launched in October 2021, so Fidelity’s foray into thematic ETFs is new.
So what do we know so far about these ETFs and are they worth investing in? Here is what you need to know:
- Both ETFs are starting off with under $5 million in Net Assets. For comparison, the other four thematic ETFs currently range from $11.39 million to $40.81 million in Net Assets.
- But these thematic ETFs are still very small compared. Fidelity’s Blue Chip Growth ETF (FBCG) currently has $384.84 million of Net Assets, and one of the leading tech focused ETFs, the Technology Select Sector SPDR ETF (XLK), has $43.02 billion in Net Assets.
- FDIG aims to track the Fidelity Crypto Industry and Digital Payments Index, which consists of companies engaged in cryptocurrency, blockchain technology, and digital payments.
- The three biggest holdings of FDIG are Block (SQ), Coinbase (COIN), and Marathon Digital Holdings (MARA). The ETF currently has 35 holdings.
- FMET aims to track the Fidelity Metaverse Index, which consists of companies that are involved in establishing or enabling the metaverse.
- The three biggest holdings of FDIG are Apple (AAPL), Meta (FB), and Alphabet (GOOGL). The ETF currently has 51 holdings.
If you believe that there is much of a future in crypto or the metaverse, these ETFs are worth considering. However, the first four thematic ETFs that Fidelity launched have not done well so far. Since their launch in October 2021, here is how these ETFs have done against VOO (which tracks the S&P 500) and QQQ (which contains some of the biggest blue chip tech stocks):
- VOO: 0.04%
- QQQ: -7.49%
- FRNW (clean energy): -15.42%
- FDHT (digital health): -18.94%
- FDRV (electric vehicles and transportation): -20.75%
- FCLD (cloud computing): -27.08%
In conclusion, the track record for Fidelity’s thematic ETFs, while brief, is not impressive. Will these two new ETFs fare different for long term investors? And if not, will these ETFs be useful for active traders? We will revisit these ETFs later in the year for an update.