Fidelity Creates New ETF Equity Suite for Fee-Conscious Investors

Fidelity Investments is going after fee-conscious investors with its new Fundamental ETF equity suite by cutting expense ratios on three ETFs and unveiling another to join the suite.

In addition to the fee cuts, the three existing ETFs will be renamed, have new ticker symbols, and expanded portfolio management teams.

According to Fidelity, the Fundamental ETF suite will capture “high conviction investment ideas from multiple Fidelity portfolio managers.”

In a statement, the company said, “The investment process will also apply a quantitative portfolio construction process designed to emphasize securities in which the adviser has high conviction subject to appropriate security and portfolio-level risk, liquidity, and trading characteristics.”

As of Feb. 26, the $264 million Fidelity Growth Opportunities ETF (FGRO) will become the Fidelity Fundamental Large Cap Growth ETF (FFLG), and the expense ratio will drop to 38 basis points from 59 basis points.

FGRO gained 49.7% last year and is up 10.7% so far this year.

The $212 million Fidelity New Millenium ETF (FMIL) will become the Fidelity Fundamental Large Cap Core ETF (FFLC), the expense ratio will drop to 38 basis points from 59 basis points.

FMIL gained 25% last year and is up 7.7% this year.

And the $46 million Fidelity Small-Mid Cap Opportunities ETF (FSMO) will become the Fidelity Fundamental Small-Mid Cap ETF (FFSM), and the expense ratio will drop to 43 basis points from 60 basis points.

FSMO gained 17.3% last year and is up 1.6% this year.

Fidelity's New Fund

The new fund joining the suite is the Fidelity Fundamental Large Cap Value ETF (FFLV), charging 38 basis points.

“This launch builds on our legacy of active management through the ETF wrapper, as we continue to leverage both our fundamental approach along with quantitative construction techniques,” said Greg Friedman, Fidelity’s Head of ETF Management and Strategy.

Outside the Fundamental ETF suite, Fidelity is launching the Fidelity Low Duration Bond ETF (FLDB), which will charge 20 basis points.

The new fixed income ETF joins Fidelity’s $8.2 billion fixed income ETF lineup.

The strategy is described as providing a “high level of current income consistent with preservation of capital by normally investing at least 80% of assets in investment-grade debt securities of all types and repurchase agreements for those securities.”

“The launch of Fidelity Low Duration Bond ETF complements our robust fixed income offering to help meet client demand for longer duration solutions in the ultrashort bond category,” Friedman said.

The changes to the lineup will give Fidelity 66 ETFs that combine for $55 billion.