Fidelity offers a wide range of investment options to help its customers meet their personal investing goals. For individuals focused on sustainability, the Fidelity Sustainable U.S. Equity ETF is one broad strategy that recently crossed its three-year threshold.
“In a time of economic and geopolitical uncertainties, one thing I continue to have high confidence in is the durability and resilience of sustainable businesses.” That’s according to Nicole Connolly, CIO of sustainable investing at Fidelity Investments, who, along with Michael Robertson, CFA, head of quantitative sustainable investing at Fidelity Investments, are portfolio managers of FSST.
These companies “exhibit robust corporate governance, stewardship of human capital that attracts and retains top talent, and careful use of natural resources to allow them to endure and deliver returns to investors for the long term,” said Robertson.
The actively managed strategy has outperformed since its inception on 6/15/21, according to YCharts data, shown below, when compared to its broad market benchmark, the Russell 3000 Index. The Index makes up approximately 98% of investable U.S. equities, according to FTSE Russell.
FSST: Research and Sustainability Themes
Fidelity relies on its own proprietary ESG ratings for companies based on a wealth of research. These ratings are a key aspect of the security selection process. That’s along with other financially material considerations, when selecting securities for FSST and other active sustainable investment strategies. Fidelity’s proprietary ratings leverage both sophisticated quantitative analysis and deep sector-specific fundamental assessments. This analysis is driven by input from Fidelity’s best-in-class fundamental research capabilities across fixed income, high income, and equity, alongside a dedicated sustainable investing team.
Fidelity’s sustainability assessments include climate-focused data such as emissions, water and waste management, and material climate risks to a company and industry. Also included are a company’s workforce management, data privacy, supply chain practices, and more. Risk analyses and sustainability evaluations are updated at least annually.
Growing Sustainability
FSST seeks long-term capital growth by investing primarily in U.S. companies with proven sustainable business models or whose core business practices are focused on solving global environmental or social challenges. The fund also invests in companies working to improve their practices, driving long-term value.
A tangible example of this is investing in companies working to conserve and recycle water more efficiently. Over two billion people currently lack access to safe, clean drinking water. The threat of worsening weather events may potentially exacerbate access issues, escalating the demand for water security and conservation.
Another example includes investing in companies working to strengthen and improve the power grid. This involves increasing resiliency to weather events such as storms and wildfires, as well as building out wind and solar capabilities and connections within the grid. A third theme entails investing in companies creating labeling that enables traceability across apparel and food supply chains, thereby facilitating the circular economy.
A company’s financial health, industry positioning relative to peers, as well as market and economic conditions are all critical considerations when evaluating securities for the fund.
FSST carries an expense ratio of 0.59%.
For more news, information, and strategy, visit the ETF Investing Channel.
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