Fidelity Boosts Active ETF Line With 5 New Funds
Asset manager unveils global equity strategies amid growing demand for active management.
Fidelity Investments is adding five equity funds to its active ETF lineup as the asset manager seeks to tap rising demand for hands-on management that aims to beat broad indexes.
The new offerings 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), according to a Thursday, Nov. 21 company announcement.
The launches come as investors pour billions into active ETFs in hopes of beating wider markets, typically paying extra fees for those added gains. According to data cited in the release, 29% of advisors now have some allocation to active ETFs, representing a 123% increase from 2022. etf.com's ETF Report: Global Investor Survey, found 75% of financial advisors say they are somewhat-to-very interested in increasing allocations to actively managed ETFs over the next six months.
Boston-based Fidelity evaluates factors including valuation, growth and quality metrics to select securities for the so-called enhanced funds, according to their prospectuses. The fundamental ETFs start with analyst research and security recommendations from Fidelity’s portfolio managers.
For emerging market funds specifically, the strategies consider factors like a country’s economic development, political stability and market infrastructure when making investment decisions, according to the prospectuses.
Active Management Growth
U.S. markets trade 1,571 active management ETFs, which hold $754.3 billion. The largest is the $36.1 billion JPMorgan Equity Premium Income ETF (JEPI), which has pulled in $3.7 billion in inflows this year. According to BlackRock’s research, active ETFs globally are on track to top $4 trillion by 2030.
The new funds feature expense ratios ranging from 0.18% for FEAC to 0.6% for FFEM, according to their prospectuses. Additionally, Fidelity reduced the expense ratio of its Fidelity High Yield Factor ETF to Fidelity Enhanced High Yield ETF (FDHY) from 0.45% to 0.35%.
The new funds build upon Fidelity’s existing ETF business, which now includes 76 ETFs and ETPs with $101.6 billion in assets under management, according to etf.com data.
