FLRG: A Defensive Bet With Mixed Results

2025-03-27 10:12:41 ET

Summary

• FLRG's multifactor strategy targets large-cap and mid-cap stocks with favorable valuations, high-quality profiles, positive momentum, and lower volatility.
• The fund underperformed in recent bull markets due to higher exposure to smaller-cap stocks but offers lower downside risk compared to the S&P 500.
• FLRG's portfolio has lower concentration risk, with top holdings making up a smaller percentage than the S&P 500.
• FLRG is more suitable as a defensive investment rather than a high-growth play due to its lower downside risk in market turmoil.

ETF Overview

Fidelity U.S. Multifactor ETF ( FLRG ) invests in a portfolio of about 105 U.S. stocks that are selected based on multiple factors. The fund’s expense ratio of 0.16% is not cheap. Other multifactor funds such as iShares U.S. Equity Factor ETF ( LRGF ) has a lower expense ratio of 0.08%. FLRG tracks the Fidelity U.S. Multifactor Index, which uses four key factors to select stocks: valuation, quality, momentum, and low volatility. The result is a portfolio that underperforms in past bull markets but provides better downside risk. It also has slightly lower concentration risk to individual stocks than the S&P 500 index. Therefore, this fund appears to be more suitable as a defensive position rather than a growth play in one’s portfolio....

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