Fidelity to Launch Nasdaq Composite ETF


Yet another major player is set to enter the ETF industry. Earlier this week mutual fund giant Fidelity filed for its first exchange-traded fund that will track the Nasdaq Composite index.

The new fund, which has expenses pegged at 0.30%, should begin trading later this summer in mid-August, according to the SEC filing. It will be the first ETF tracking the Nasdaq Composite index, although the heavily traded "cubes" (AMEX:QQQ) tied to the Nasdaq 100 index have been around since 1999. The QQQ, with an expense ratio of 0.20%, holds the 100 largest domestic and international non-financial companies listed on the Nasdaq based on market capitalization.

The Nasdaq Composite index has more companies with over 3,400, according to the Nasdaq website. Although the new Fidelity ETF will have more names than QQQ, it should still be very volatile.

For example, the Nasdaq-100 ETF has been down an average of 33.66% per year over the last three years, with a 3-year standard deviation of 33.16%, according to Morningstar. The Nasdaq Composite index, on the other hand, has an annualized 3-year return of -27.61%, with a 3-year standard deviation of 30.48%.