Beyond the Benchmark: Three Fidelity ETFs Poised to Outpace the S&P 500

For investors seeking growth beyond the broad market, exchange-traded funds (ETFs) offer a compelling blend of diversification and targeted exposure. While the S&P 500 index is a common benchmark, several focused strategies have consistently outperformed it in recent years. Fidelity Investments, with its deep research capabilities and range of products, houses several such contenders.

Here, we examine three Fidelity ETFs with strong track records and distinct approaches, from betting on American tech innovation to harvesting dividends from overseas markets.

Fidelity Blue Chip Growth ETF (FBCG): Riding the Mega-Cap Wave

This actively managed fund concentrates on large-cap, high-growth U.S. companies—often called "blue chips." With 373 holdings and an expense ratio of 0.61%, FBCG is heavily weighted toward the information technology sector (48%), placing significant bets on giants like Nvidia, Microsoft, and Apple. Its top ten holdings constitute about 61% of the portfolio, a concentrated approach that has fueled impressive returns. The fund has delivered an average annual return of 17.17% over one year and 32.19% over three years, significantly outpacing the broader market.

Analysis: FBCG's performance is tightly linked to the fortunes of mega-cap tech. While this has been a winning strategy, it introduces sector-specific volatility. The expense ratio is higher than passive index ETFs, paying for active management aimed at selecting the fastest growers among established companies.

Fidelity MSCI Information Technology Index ETF (FTEC): Pure-Play Tech Exposure

For investors who want a comprehensive, low-cost stake in the tech sector without picking individual stocks, FTEC is a prime candidate. This passively managed fund tracks the MSCI USA IMI Information Technology 25/50 Index, holding 291 stocks with a razor-thin expense ratio of 0.084%. It provides targeted exposure to semiconductors (36%), software (31%), and hardware. Top holdings include Nvidia, Apple, and Broadcom.

Analysis: FTEC has "crushed" the S&P 500, gaining 23% in the past year and over 100% in five years. Its beta of 1.28 indicates higher volatility than the market, a trade-off for its stellar growth. The minimal dividend yield (0.38%) underscores its focus on capital appreciation. In a sustained tech rally, FTEC offers an efficient vehicle to capture those gains.

Fidelity International High Dividend ETF (FIDI): Global Income and Diversification

This ETF addresses two key investor needs: geographical diversification and income. FIDI tracks an index of 115 international large- and mid-cap stocks with high dividend yields and growth potential, spanning sectors like financials (34%) and consumer staples. With a dividend yield of 4.34% and an expense ratio of 0.19%, it has returned 35% over the past year.

Analysis: FIDI offers a hedge against U.S.-centric portfolios and taps into income streams from global giants like Nestlé and Rio Tinto. Its 25.5% allocation to the top ten holdings suggests a diversified approach. For investors concerned about U.S. market concentration or seeking passive income from growing global dividends, FIDI presents a strategic option.

Investor Perspectives

"FBCG and FTEC make a powerful case for why a 'set-and-forget' S&P 500 strategy might leave money on the table," says Michael Rourke, a certified financial planner in Boston. "Thematic concentration, when done right, can drive alpha, though it requires a higher risk tolerance."

"The international dividend play is underrated," notes Priya Sharma, a portfolio manager focusing on global equities. "FIDI provides yield and diversification in one package. In a shifting economic landscape, having that non-U.S. exposure is prudent risk management."

"This is just performance chasing dressed up as strategy," argues David K. Miller, a vocal critic of active management. "These funds are hot because tech is hot. That 0.61% fee on FBCG is a drag that compounds over time. Investors are being sold past performance as future promise, and when the tech tide turns, they'll be left holding the bag."

The Bottom Line: While the S&P 500 offers broad market stability, these three Fidelity ETFs demonstrate how targeted strategies in growth, technology, and global income can potentially enhance returns. As with any investment, alignment with personal risk tolerance and long-term financial goals is paramount.