Fidelity to Launch 5 New ESG Funds

Investor assets in sustainable investments have been growing exponentially. The U.S. Forum for Sustainable and Responsible Investment (US SIF Foundation) has reported that sustainable investment assets reached $17.1 trillion — or one in three dollars — of total U.S. assets under professional management in 2020, a 42% increase over 2018.

The three new Fidelity mutual funds are:

• Fidelity Climate Action Fund (FCAEX), which will invest at least 80% of assets in equities of companies that Fidelity believes are working to address climate change through their corporate strategy or through the technology services or products they provide. Expense ratio, retail class: 1.05%.
• Fidelity Sustainability U.S. Equity Fund (FSEBX), which targets a minimum 80% assets in the stocks of companies that the firm believes have proven or improving sustainability practices. Expense ratio, retail class: 0.90%.
• Fidelity Environmental Bond Fund (FFEBX), which invests at least 80% of assets in environmental debt securities and repurchase agreements for those securities, primarily  investment grade. These include securities of issuers that develop or provide products or services seeking environmental solutions or that support efforts to reduce their own environmental footprint as well as securities that support environmental projects. Expense ratio, retail class: 0.45%.

The two new ETFs are the Fidelity Sustainability U.S. equity ETF (FSST) and Fidelity Women’s Leadership ETF (FDWM). Both have expense ratios 0.59%.  FSST is an ETF version of the FSEBX fund; FDWM is an ETF version of a Fidelity mutual fund with the same name. It will normally invest at least 80% of its assets in the stocks of companies that prioritize and advance women’s leadership and development. They might have a female senior manager or women representing at least one-third of their boards of directors or have adopted policies designed to attract, retain and promote women.

The two semi-transparent ETFs use Fidelity’s tracking basket methodology, which includes some, but not all of the ETF holdings, and is published daily along with the overlap of the basket with the funds’ actual holdings. The actual ETF holdings will be published monthly with a 30-day lag on the Fidelity website. Fidelity has licensed this methodology to a number of other asset managers.