For decades, traditional index-based ETFs have served as the low-cost foundational anchor for core allocations, consistently demonstrating that outperforming a broad market index is an uphill battle.
I compare Fidelity Sustainable High Yield ETF (FSYD) and Fidelity Enhanced High Yield ETF (FDHY), two distinct high yield strategies. FSYD focuses on ESG criteria, investing in socially conscious issuers using both fundamental and quantitative analysis. FDHY employs quantitative analysis and proprietary research, targeting BB/B-rated global high yield securities.
The Fidelity Sustainable High Yield ETF delivers a 6% yield from junk bonds screened for ESG and strong fundamentals. The portfolio exhibits low interest rates and company-specific risks. FSYD has outperformed HYG and ESG high-yield peers since inception, with similar risk and yield metrics but higher turnover and expenses.
Have clients seeking new ideas in the ESG space? In the medium term, many advisors may be looking to meet client goals by finding the right ESG ETF fit for their portfolios, with more options than ever.