iShares and Fidelity are serving up their income product for yield-hungry investors.
One year after Fidelity Investments and iShares formally unveiled their ETF strategic alliance, the two firms yesterday launched the BlackRock Diversified Income Portfolio, an income-focused ETF-managed account.
The product launch comes at a time when income and yields continue to be the focus for investors in 2014 as it was last year. The Federal Reserve’s continued push to taper its bond-buying program and rhetoric from Janet Yellen about a possible earlier-than-expected interest-rate hike have investors looking into all corners of the ETF space for yields.
Fidelity’s Strategic Advisers will serve as the investment advisor of the managed account, while BlackRock Investment Management will serve as the portfolio strategist. The ETF managed account, a multi-asset income solution composed primarily of ETFs, will be available through Fidelity’s managed accounts service beginning May 1.
The new product launch is the first of many from Fidelity jointly with iShares or solely, according to Tony Rochte, the executive in charge of SelectCo, the company’s Denver-based sector funds operation that encompass both index and active strategies as well as both ETF and mutual-fund wrappers.
In a previous interview with ETF.com, Rochte said his firm is looking to fill its ETF playbook with more active fixed-income offerings and smart-beta ETFs. “As I said, we have formed and extended a deep partnership with BlackRock iShares on the passive ETF front. And we’ll continue with that,” he noted.
PowerShares has updated regulatory paperwork on its proposed active alternative ETF, dubbed the PowerShares Multi-Strategy Alternative Portfolio (LALT), to include tickers and fees for the fund that seeks low correlation to the broader markets at a time when market observers are expecting a pullback in broader markets.
The S&P 500 Index is up about 1.6 percent year-to-date after a 32 percent surge last year. Alternative strategies seek to dampen volatility when markets experience wild swings, but trail broader markets during big run-ups.
For example, the IQ Hedge Multi-Strategy Tracker ETF (QAI | C-70) is up 0.9 percent year-to-date after returning 5.5 percent in 2013.
LALT will invest in a combination of equity securities, futures contracts and other securities using long/short and other alternative investment strategies. It has an expense ratio of 0.96 percent, or $96 for every $10,000 invested.