Fidelity Investments on Friday filed preliminary registration statements for 10 passively managed sector exchange-traded funds and three actively managed fixed-income ETFs, as it makes a push to become a bigger player in the ETF space.
According to a registration document filed with the Securities and Exchange Commission, Fidelity’s 10 passive equity funds will track MSCI indexes and will be sub-advised by BlackRock Fund Advisors. These funds will target the following sectors: consumer discretionary; consumer staples; energy; financials; health care; industrials; information technology; materials; telecommunications services; and utilities.
No information was given about ticker symbols or fund fees. Fidelity spokeswoman Nicole Goodnow said it’s too early to comment on possible launch dates.
In March, Fidelity and BlackRock forged a partnership where Fidelity said it would create new ETF portfolio strategies using BlackRock’s iShares ETFs as components within its Portfolio Advisory Services managed account offering. In addition, Fidelity has more than doubled the number of commission-free iShares ETFs traded on the Fidelity brokerage platform, to 65 from 30.
As part of the deal, BlackRock said it would support Fidelity’s passive sector investment management efforts, such as the proposed equity funds now in registration.
Fidelity is coming late to a party where one of its main mutual fund rivals, Vanguard, has already zoomed up the charts to rank third among U.S. ETF providers in assets under management, according to IndexUniverse.
Given its late start, a couple of ETF analysts question whether Fidelity’s plan to roll out index-based equity funds in well-trodden sectors will help it cut through the clutter of the ever-expanding and increasingly competitive ETF industry.
Todd Rosenbluth, director of ETF research at S&P Capital IQ, wrote in a report that he expected Fidelity to offer more actively managed or rules-based ETFs leveraging the strong track record of its existing sector mutual funds.
“To us, this is a ‘me-too’ approach and might make it hard for Fidelity, despite its scale and strong brand in the investment community, to gain share in a crowded market,” Rosenbluth said.
Morningstar ETF analyst Robert Goldsborough agreed. “It’s not clear what Fidelity would bring to the table,” he said in an interview. “There are a lot of entrenched incumbents on the passive side.”