Fidelity Investments launched the Fidelity Target Allocation Index-Focused Model Portfolios, an expansion of the model portfolios Fidelity announced earlier this year.
These low-cost portfolios help advisors scale their businesses and deliver professional, institutional-quality investment management for their clients.
The Fidelity Target Allocation Index-Focused Model Portfolios will offer five different asset allocation mixes, aligned across a spectrum of risk profiles, primarily invested in Fidelity index mutual funds.
The inclusion of Fidelity index funds, which are some of the most competitively priced in the industry with expense ratios as low as 0.015%, makes these some of the lowest cost models available with an average expense ratio as low as 0.03%.
Fidelity has a long-standing commitment to use its leadership and scale to consistently deliver enhanced value to investors. For example, as Fidelity has increased its index mutual fund assets to nearly $450 billion, the firm systematically reduced index mutual fund pricing by nearly 50 percent to provide greater value to investors.
Notably, as Fidelity passed on the benefit of its scale to investors, its stock and bond index funds and sector ETFs have total net expenses lower than most of Vanguard's comparable funds.
“When we first launched Fidelity Model Portfolios, we wanted to help advisors manage their investments more efficiently so they can spend more time on what clients value most – including one-on-one financial planning,” said Matt Goulet, senior vice president, Fidelity Institutional Asset Management.
“With the majority of advisors using some form of models to construct their portfolios, this offering gives advisors more options in the model portfolios space – at a lower cost.”
According to Cerulli data, the managed accounts market is estimated at $6 trillion and is expected to grow at a 14.5% annual rate over the next few years.
Research reveals that eight in 10 advisors use models in their portfolios and that they use them to provide better investment outcomes, help efficiently scale their businesses, and enable them to focus more on providing planning services to their clients.
Fidelity Model Portfolios offer access to Fidelity’s 70 years of investing and portfolio management experience and 25 years of experience managing models.
They also include the Fidelity Target Allocation Model Portfolios, announced earlier this year, which seek to combine Fidelity active and passive mutual funds to enhance the potential for excess return while achieving a specific level of risk.
These portfolios are available on Envestnet’s platform as well as through Fidelity’s Managed Account Solutions platform, offering advisors an efficient way to implement models and manage individual clients’ accounts.
They also enhance Fidelity’s current line-up of portfolio capabilities, which include insights from the Capital Markets Strategy team, a robust thought leadership program on portfolio construction, portfolio evaluations with the Portfolio Quick Check diagnostic tool and consultation from the Portfolio Construction Guidance team.
“The expansion of Fidelity Model Portfolios reflects the deep, diverse capabilities that Fidelity has to offer -- including methodologies using active, passive and a combination of both,” continued Goulet.
Fidelity Model Portfolios are available to advisors at broker-dealers, registered investment advisors, banks, and insurance companies. ]
