Fidelity Hedged Equity ETF

Fidelity Hedged Equity ETF (FHEQ) is an actively managed fund. It holds about 187 mostly large US companies picked with computer models, plus S&P 500 index put options, a kind of insurance meant to soften losses in some market drops. Its 0.48% expense ratio matches the average of similar options-based funds. However, its one-year return of 8.1% through October 27, 2026, trailed all five of those funds.

• Over the year to Oct 27, 2026, FHEQ returned +8.1%, 6th of 6 among similar funds.
• Its worst full calendar year was 2025 (+13.4%); its best was 2025 (+13.4%).
• The deepest fall in its price history was 11.1% (Dec 6, 2024 to Apr 21, 2025), recovered by Jun 24, 2025.

As of Jul 31, 2026, the fund held 187 securities; the ten largest made up 39% of assets.

By sector

• Over the three months to Jul 31, 2026, investors added a net $62.3M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +4.82%, -1.55%, +1.24%.

FHEQ does not track an index. Fidelity's managers normally put at least 80% of assets in stocks, generally of companies similar in size to those in the S&P 500 or Russell 1000 Index. They use computer-aided, quantitative analysis of valuation, growth, profitability and other factors. The goal is a broadly diversified group of stocks that may beat the S&P 500's total return. As of July 31, 2026, the fund held 187 issuers, with 39% in its top 10. The largest were NVIDIA (7.8%), Apple (7.3%), Microsoft (5.1%), Amazon (4.2%) and Alphabet (5.9% across two share classes). Technology made up about 34%. Turnover was 88%, so the fund trades a large share of its portfolio each year.

The hedge comes from put options. A put on the S&P 500 gains value when the index falls below a set level, called the strike price, so it can offset part of a decline. The fund spreads its puts across different strikes and expiration dates. On July 31, 2026, its seven options positions were about 1% of assets. They ranged from a 7,220 strike expiring in October 2026 to strikes between 4,600 and 4,850 expiring from May through July 2027.

How much protection the fund holds depends mainly on what puts cost. Coverage can shrink when that insurance is expensive. This is not a buffer fund with a set loss limit. The fund may also write options, and it lends securities to earn extra income.

• FHEQ charges 0.48% a year, versus an average of 0.48% for the similar funds below (3rd of 6, cheapest first).
• The fee includes a 0.04% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $49 in the first year and $647 over 10 years (assuming a 5% annual return).

It holds mostly large US stocks but adds S&P 500 put options meant to soften some declines, and it has moved less than the market.

FHEQ could give a portfolio stock-market growth with smaller swings. Over the year to October 27, 2026, its beta was 0.76, meaning it moved about three-quarters as much as the market. Its volatility was 10.2%. The fund launched on April 9, 2024, so it has no record in the 2008, 2020 or 2022 downturns. Its deepest drop was 11.1%, from December 6, 2024, to April 21, 2025. It recovered by June 24, 2025, about two months later. Its only full calendar year, 2025, returned 13.07%. For someone who may need to raise cash in a bad year, that is a short and mild test.

Income is small: the yield was 0.6% as of October 27, 2026, paid quarterly. Under the SEC's standard $10,000 example, costs come to $49 after one year and $647 after 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.