Fidelity Investments is enhancing its exchange-traded fund (ETF) offerings with the launch of five new actively managed equity ETFs and a fee reduction on an existing fund, the firm announced Thursday.
This move reflects the growing preference among investors for ETFs over mutual funds due to their trading flexibility and tax efficiency. As demand surges, asset managers are accelerating the release of active ETF products. According to Morningstar, 328 new active ETFs hit the market in 2023 through September 30.
The five new funds include the Fidelity Enhanced U.S. All-Cap Equity ETF (FEAC), Fidelity Enhanced Emerging Markets ETF (FEMR), Fidelity Fundamental Developed International ETF (FFDI), Fidelity Fundamental Global ex-U.S. ETF (FFGX), and Fidelity Fundamental Emerging Markets ETF (FFEM). These ETFs feature competitive gross expense ratios, with FEAC at 0.18%, FEMR at 0.38%, FFDI and FFGX at 0.55%, and FFEM at 0.60%.
Available commission-free to individual investors and financial advisors through Fidelity’s online brokerage platform, these ETFs aim to deliver unique actively managed solutions. “Our goal is to provide investors with differentiated, actively managed investment products,” said Greg Friedman, Fidelity’s head of ETF management and strategy.
Fidelity is also revamping its existing Fidelity High-Yield Factor ETF, renaming it the Fidelity Enhanced High-Yield ETF (FDHY). Along with the rebranding, the total expense ratio will drop from 0.45% to 0.35%. Fidelity explained the name change aligns more closely with the fund’s active investment approach.
Headquartered in Boston, Fidelity is a leader in wealth management and retirement planning, with a substantial brokerage platform catering to both retail investors and independent financial advisors. As of September 30, Fidelity reported $15 trillion in assets under administration, including $5.8 trillion in discretionary assets.
The firm now manages 76 ETFs and products with a combined $93 billion in assets. Fidelity’s portfolio construction team regularly analyzes thousands of managed portfolios and reports a growing trend among financial advisors allocating client assets to active ETFs.
This strategic expansion aligns with broader industry trends. Many asset managers are pivoting to ETFs to meet rising investor demand for active strategies in an ETF format while countering outflows from active mutual funds. Charles Schwab recently announced plans to launch its third active ETF, the Schwab Core Bond ETF, in early 2025. Similarly, Vanguard has expanded its lineup of active ETFs, introducing two active municipal bond ETFs in August: Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF.
The industry’s rapid shift toward ETFs underscores their growing significance as core portfolio tools for both individual and institutional investors, with active ETFs emerging as a focal point for innovation and growth.
