Fidelity: These Are the 3 Biggest Benefits of Active ETFs

Fidelity: These Are the 3 Biggest Benefits of Active ETFs

Fidelity’s Bowman talks active ETFs.

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Reviewed by: Mark Nacinovich
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Edited by: Kent Thune

Active funds have taken the ETF world by storm. Despite having approximately 6% of assets as of October 2023, active exchange-traded funds have accounted for nearly a quarter of all inflows this year. What’s causing this massive growth? In this episode of Talk ETFs, Fidelity Investments’ Jeff Bowman sits down with etf.com Senior Analyst Sumit Roy to answer this question and more.

Bowman is the Director of Investment Product at Fidelity, the brokerage and asset management firm that’s a growing force in the active ETF space.   

According to Bowman, there are many reasons why investors are embracing active ETFs this year, not the least of which is the ability to potentially outperform index funds*.  

“The ability for [active] portfolio managers to make adjustments to the portfolio and be proactive, leads to the potential for increased returns over the long run,” Bowman says.

Fidelity currently offers 21 active equity ETFs and 10 active fixed income ETFs.  

“We have decades of experience across market conditions and the investment teams bring a variety of perspective to help clients reach their goals.”  

In addition to breaking down why investors are running towards active ETFs, in this episode, Bowman talks about three key benefits that active ETFs provide investors. He also goes over Fidelity’s active ETF lineup and points investors to where they can learn more.  

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully.

Exchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. ETPs that target a small universe of securities, such as a specific region or market sector, are generally subject to greater market volatility, as well as to the specific risks associated with that sector, region, or other focus. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error. An ETP may trade at a premium or discount to its net asset value (NAV) (or indicative value in the case of exchange-traded notes). The degree of liquidity can vary significantly from one ETP to another and losses may be magnified if no liquid market exists for the ETP's shares when attempting to sell them. Each ETP has a unique risk profile, detailed in its prospectus, offering circular, or similar material, which should be considered carefully when making investment decisions.

*While active ETFs offer the potential to outperform an index, these products may more significantly trail an index as compared with passive ETFs.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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Talk ETFs is a weekly video series hosted by etf.com’s Senior Analyst Sumit Roy. Episodes highlight up-to-the-minute investing trends and strategies with commentary from leading experts in the ETF industry.