ETF Summary
A dynamic, business cycle driven asset allocation strategy that rotates across sectors, selects fundamentals-led winners, and enhances returns through covered-call income.
Why Covered Call Income?

A covered call strategy, a type of an options overlay strategy, allows an investor to potentially earn income through an option premium received by selling the right to buy the stock over the strike price within a certain time frame.

In return, the investor’s upside can be limited if the price of the stock at expiration exceeds the strike price plus the option premium received.

The Fund uses covered call strategy to potentially generate income from its long positions while staggering the strike prices and expirations to manage the risk of positions being called.


Key Information
Inception Date 4/30/24
Ticker PSTR
Primary Exchange NASDAQ, Inc.
Net Assets TBD
Shares Outstanding TBD
Volume TBD
30-Day Median Bid/Ask Spread TBD

Data as of

ETF Prices
NAV
Market TBD

Data as of

Investment Strategy

A business cycle approach to sector investing uses probabilistic analysis to identify the shifting phases of the economy, which provides a framework for allocating to sectors according to the probability that they will outperform or underperform. We use a business cycle approach to potentially generate positive active returns over an intermediate time horizon. We enhance this outperformance with complementary analysis on sector & industry fundamentals, drivers, and valuations. Outperformance can be further enhanced by adding bottoms up security analysis within each sector & industry.

Source: Fidelity Investments Asset Allocation Research Team (AART)

Over the intermediate term, asset performance is often driven largely by cyclical factors tied to the state of the economy, such as corporate earnings, interest rates, and inflation. The business cycle, which encompasses the cyclical fluctuations in an economy over many months or a few years, can be a critical determinant of equity market returns and the performance of equity sectors.

Source: Fidelity Investments Asset Allocation Research Team (AART)

Sector Performance by Business Cycle Phase

Due to structural shifts in the economy, technological innovation, varying regulatory backdrops, and other factors, no one sector has behaved uniformly for every business cycle. While it is important to note outperformance, it is also helpful to recognize sectors with consistent underperformance. Knowing which sectors of the market to avoid can be just as useful as knowing which tend to have the most robust outperformance.

Sector Early Mid Late Recession
Financials +     -
Consumer Discretionary ++   --  
Technology + + -- --
Industrials ++ +   --
Materials   -- + ++
Consumer Staples -   + ++
Health Care - ++ ++
Energy -- ++  
Telecom --     ++
Utilities -- - + ++

Sector Rotation



Why Sector Rotation?

A landmark study published by Brinson, Singer and Beebower suggests that portfolio asset allocation is the most important long-term determinant of investment results.

About Sector Rotation

The movement of investment flows from one sector/industry to another as investors and traders anticipate the next stages of business cycles. The economy broadly moves through four different phases in the economic cycle: early, mid, late, and recession. As the economy moves through the business cycles, a sector/industry and the companies that dominate it may thrive or languish, depending on the cycle and its effects on that sector/industry. A business cycle-driven investment approach, along with a focus on industry drivers and valuations, can provide investors with a long-term investment edge.

Understanding The Business Cycle:

Every business cycle is different in its own way, but certain patterns have tended to repeat themselves over time. Fluctuations in the business cycle are essentially distinct changes in the rate of growth in economic activity, particularly changes in three key cycles—the corporate profit cycle, the credit cycle, and the inventory cycle—as well as changes in the employment backdrop and monetary policy.

While unforeseen macroeconomic events or shocks can sometimes disrupt a trend (e.g. COVID), changes in these key indicators historically have provided a relatively reliable guide to recognizing the different phases of an economic cycle. Our quantitatively backed, probabilistic approach helps in identifying, with a reasonable degree of confidence, the state of the business cycle at different points in time.

The performance of economically sensitive assets such as stocks tends to be the strongest during the early phase of the business cycle when growth is rising at an accelerating rate, then moderates through the other phases until returns generally decline during the recession. In contrast, more defensive assets such as Treasury bonds typically experience the opposite pattern, enjoying their highest returns relative to stocks during a recession and their worst performance during the early cycle.

There are Four Phases of the Business cycle
Early-Cycle Phase

Generally, a sharp recovery from recession, marked by an inflection from negative to positive growth rates in economic activity (i.e. GDP, Industrial Production), followed by an accelerating growth rate. Credit conditions stop tightening amid easing monetary policy, creating a healthy environment for rapid margin expansion and profit growth. Business inventories are low, while sales growth improves significantly.

Mid-Cycle

Typically, the longest phase of the business cycle. The mid-cycle is characterized by a positive but more moderate rate of growth than that experienced during the early-cycle phase. Economic activity gathers momentum, credit growth becomes strong, and profitability is healthy against an accommodative—though increasingly neutral—monetary policy backdrop. Inventories and sales grow, reaching equilibrium relative to each other.

Late-Cycle Phase

Emblematic of an “overheated” economy poised to slip into recession and hindered by above-trend rates of inflation. Economic growth rates slow to “stall speed” against a backdrop of restrictive monetary policy, tightening credit availability, and deteriorating corporate profit margins. Inventories tend to build unexpectedly as sales growth declines.

Recession phase

Features a contraction in economic activity. Corporate profits decline and credit is scarce for all economic players. Monetary policy becomes more accommodative, and inventories gradually fall despite low sales levels, setting up for the next recovery.

Covered Call

Why Covered Call Income?

A covered call strategy, a type of an options overlay strategy, allows an investor to potentially earn income through an option premium received by selling the right to buy the stock over the strike price within a certain time frame.

In return, the investor’s upside can be limited if the price of the stock at expiration exceeds the strike price plus the option premium received.

The Fund uses covered call strategy to potentially generate income from its long positions while staggering the strike prices and expirations to manage the risk of positions being called.

Covered Call Strategy: Income Generation

Option Strategy. To enhance returns and generate income, the Fund may from time to time incorporate a covered call option writing strategy. Covered call option writing is an investment strategy of writing (selling) call options against securities owned by the Fund to generate additional returns from the option premium. The Fund’s option strategy may also have the benefit of reducing the volatility of the Fund’s portfolio in comparison to that of broad equity market indexes.

The Fund pursues its options strategy by writing (selling) covered call options on an amount from 0% to 100% of the value of the underlying security in the Fund’s portfolio. The Fund seeks to earn income and gains both from dividends paid on the securities owned by the Fund and cash premiums received from writing or “selling” covered call options on securities held in the Fund’s portfolio.

The Fund may not sell “naked” call options, i.e., equity options representing more shares of a security than the Fund has in the portfolio.

Top 10 Holdings
PERCENTAGE OF NET ASSETS NAME TICKER IDENTIFIER SHARES HELD MARKET VALUE
Data as of -
Performance

Month end returns as of:  

  1 Mo. 3 Mo. 6 Mo. Since Inception (4/30/24)
Fund NAV
Closing Price - - - -

 

Quarter end returns as of  :

  1 Mo. 3 Mo. 6 Mo. Since Inception (4/30/24)
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Closing Price - - - -

Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of future results. Total return and value will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns include changes in share price and reinvestment of dividends and capital gains, if any.

Shares are bought and sold are market price, not net asset value (NAV). Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. Eastern time. NAV represents the value of each share’s portion of the fund’s underlying assets and cash at the end of the trading day. Your returns may differ if you traded shares at other times.

The total fund operating expense is 2.88%.

Net Expense: 1.07%. The Fund's investment advisor has contractually agreed to waive its fees and/or absorb expenses to ensure that Total Annual Fund Operating Expenses for the Fund (excluding any front-end or contingent deferred loads, brokerage fees and commissions, acquired fund fees and expenses, borrowing costs and extraordinary expenses do not exceed 1.00% of the Fund’s average net assets through June 30, 2026.

Historical Premium/Discount
 

 

  Q2 2024Q3 2024Q4 2024Q1 2025Q2 2025Q3 2025Q4 2025
Days at premium 41505857476453
Days at zero premium/discount 2620204
Days at discount 08431305