Fidelity Fundamental Large Cap Core ETF

FFLC

Market cap $924M

Fidelity Fundamental Large Cap Core ETF is an actively managed vehicle with about 98.2% of the net assets allocated to 102 common stocks and ADRs. FFLC has underperformed IVV and IWB since the strategy change in February 2024, delivering higher volatility and a downside capture ratio of close to 107%. While having solid quality and value characteristics, IT-heavy FFLC does not offer anything outstanding or unique to favor it over IVV.

FFLC offers active large-cap exposure with a strong track record, blending value, quality, and growth factors for consistent outperformance versus the S&P 500. The ETF's portfolio is distinctively weighted, favoring fundamentally strong names like Meta and Nvidia while underweighting or excluding high-volatility stocks like Tesla. FFLC has delivered impressive returns with lower risk and drawdowns, outperforming both broad-market and large-cap growth ETFs since inception.

FFLC offers a growth-oriented, fundamentally-driven large cap portfolio, with a strong tilt toward mega-cap tech leaders and selective sector diversification. The fund trades at a slight valuation discount to the Russell 1000, yet delivers stronger historical earnings and sales growth than the benchmark. FFLC has outperformed both the Russell 1000 and its fundamental ETF peers over 3- and 5-year periods, with lower volatility and the best Sharpe ratio in the group.

For many investors, building a diversified portfolio is one of the first steps in investing. Fidelity Investments' extensive range of ETFs offers a powerful toolkit to achieve this.

Fidelity Fundamental Large Cap Core ETF is an actively managed large-cap blend ETF with 108 holdings. The sector breakdown, top holdings and fundamentals of FFLC have nothing original compared to the Russell 1000. The fund's performance since inception outpaces both the Russell 1000 and Nasdaq 100, making it compelling for core equity exposure despite recent underperformance.

Active ETFs are building a solid reputation for themselves, and the Fidelity Fundamental Large Cap Core ETF, which belongs to this cohort has an impressive risk-adjusted return track record. FFLC is heavily exposed to the tech sector, which is not a cheap sector to own, but it does mitigate the affordability quotient with strong earnings potential. FFLC is cheaper than the Russell 1000, and the risk-reward on the charts looks favorable now.

FFLC is an actively managed equity ETF that aims to outperform the market as reflected by the S&P 500 via individual stock selection. The fund has demonstrated strong performance, especially during the volatile 2022 market, outperforming the broader market. FFLC invests in a concentrated portfolio of 100 large-cap stocks, with a significant portion of the assets invested in the top holdings.

The market is at a crossroads because of uncertainty about the tech sector performance. FFLC's diversified portfolio of value and growth stocks makes it a solid investment option in uncertain market conditions. FFLC's active portfolio management using a bottom-up approach can help it outperform in both up and downtrends.

July brought with it a market rotation mid-month as investors pivoted from large-cap to small-cap stocks. Investors looking to hone their existing large-cap portfolio with an actively managed strategy may consider the Fidelity Fundamental Large Cap Core ETF (FFLC).

FFLC is an actively managed large-cap blend fund with a new management team in place as of February 2024. Expenses are 0.38% and the ETF manages $318 million in assets. The new management team has yet to make any material changes to the portfolio since taking over. Mega-cap stocks like Microsoft and Nvidia lead the top ten. FFLC's approach slightly tilts growth, but the ETF is also attractively valued. Investors need to balance these fundamentals against the fund's relatively weak diversification and short history.