This comprehensive review delves into the Inspire Fidelis Multi Factor ETF (FDLS), a fund structured around passively managing investments in 100 equities. These selected companies strictly adhere to a framework of biblical values, aiming to offer investors a portfolio that aligns with their ethical principles. While the ETF experienced a remarkable year in 2025, its overall performance since its launch in 2022 has trailed behind major market benchmarks such as IVV and ACWI. This detailed examination will explore the fund's unique investment strategy, its financial performance, and the underlying factors contributing to its current standing, providing a balanced perspective for potential investors.
The Inspire Fidelis Multi Factor ETF, trading under the ticker FDLS, distinguishes itself by targeting companies that not only demonstrate strong financial health but also uphold specific biblical principles. This approach seeks to cater to a niche but growing segment of investors who wish their financial decisions to reflect their moral and religious beliefs. The fund employs a multi-factor investment strategy, which typically involves selecting stocks based on various quantitative metrics such as value, growth, quality, and momentum, in addition to its unique ethical screen. This dual filtering process aims to create a portfolio that is both financially sound and morally responsible.
Despite its commendable adherence to ethical guidelines, FDLS has faced challenges in matching the performance of its more conventional counterparts. Since its inception, the ETF's returns have lagged those of the iShares Core S&P 500 (IVV) and the iShares MSCI ACWI (ACWI), which represent broader market indices. This underperformance can be attributed to several factors, including its stringent selection criteria, which may exclude some top-performing companies, and its higher expense ratio of 0.69%. The fund's substantial annual turnover rate of 232% also suggests active rebalancing, potentially leading to increased trading costs and tax inefficiencies for investors.
A closer look at FDLS reveals several positive attributes, particularly its notable Growth At a Reasonable Price (GARP) characteristics and healthy quality metrics. GARP investing combines elements of both growth and value strategies, seeking companies with consistent earnings growth that are not overvalued. This suggests that the fund's holdings are generally financially stable and have potential for sustained appreciation. The quality aspect further indicates that the companies in the portfolio possess strong balance sheets, stable earnings, and effective management, all of which contribute to a robust investment profile.
However, the aforementioned issues, such as the relatively high expense ratio and significant portfolio turnover, pose considerable hurdles for FDLS. The 0.69% expense ratio is higher than many passively managed broad-market ETFs, which can erode long-term returns. The 232% turnover rate implies that, on average, more than twice the entire portfolio is traded annually, potentially increasing transaction costs and affecting overall performance. These operational factors are critical considerations for investors seeking efficient and cost-effective exposure to the market.
Notwithstanding these drawbacks, the Inspire Fidelis Multi Factor ETF remains a compelling option for investors who specifically prioritize aligning their investments with biblical values. Its strategy offers a unique blend of ethical considerations and multi-factor investing, appealing to those who wish to make a positive societal impact through their financial choices. While its performance has been mixed, the fund's commitment to its core principles makes it a noteworthy contender in the ethical investing landscape, deserving of consideration for those with a similar investment philosophy.
In conclusion, while the Inspire Fidelis Multi Factor ETF may not have consistently outperformed broader market indices since its launch, its distinctive focus on companies that align with biblical values provides a significant appeal to a specific investor base. Its solid GARP characteristics and strong quality metrics indicate a fundamentally sound investment approach, making it a viable option for those seeking ethically conscious investment vehicles. This analysis confirms its suitability for a "Hold" rating, recognizing its niche market appeal and potential for future growth within its specialized framework.