Fidelity Investments has launched a suite of actively managed exchange-traded funds called “Fundamental ETFs.” These will include three modifications of previously available funds and a new product focused on value equities.

The Boston-based firm said it is looking to position itself as a leader among active ETF providers.

The new fund in the suite is called the Fidelity Fundamental Large Cap Value ETF (FFLV). The three other funds are based on existing Fidelity products: They include the Fidelity Fundamental Large Cap Growth ETF (FFLG) and the Fidelity Fundamental Large Cap Core ETF (FFLC), both of which were created using existing funds as their core. The Fidelity Fundamental Small-Mid Cap ETF (FFSM), meanwhile, was a rebranding of another fund, according to Greg Friedman, Fidelity’s head of ETF management and strategy.

“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,” he said in a statement.

Along with new names and tickers, the three modified funds saw their expenses reduced and changes were made to their portfolio management to better execute the suite’s approach, the firm said. The changes also allowed the three ETFs to access Fidelity’s quantitative capabilities, including technology and data and analysis.

The suite capitalizes on the high-conviction investment ideas of Fidelity portfolio managers. The goal is to allow an investor access to active equities over different market capitalizations and styles, the firm said. In addition, each ETF seeks to outperform its benchmark using a proprietary, disciplined investment process. 

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

Fidelity also announced the launch of an active fixed-income ETF, the Fidelity Low Duration Bond ETF (FLDB).

“We’re committed to becoming leaders in the active ETF space in both fixed income and equity,” Friedman said in an interview with Financial Advisor. “This is a move where we can take what we’re best at, with the fundamental investing, marry it with a quant and really come up with the second part of our core.”

To obtain its income, the fixed-income ETF invests about 80% of its assets in investment-grade debt securities along with the repurchase agreements for those securities.

Fidelity wants to position the funds as the building blocks that make up the core of an advisor’s portfolio, according to Ryan McKee, senior vice president and head of emerging product specialists.

“One of the areas that these solutions fill are those big style box building-block categories with a compelling active management solution,” McKee said.

Fidelity is looking to make the ETFs competitively priced: The growth, core and value ETFs have management fees of 38 basis points, while the small-mid-cap ETF has a 43-basis-point management fee. The bond fund has an expense ratio of 0.20%.

By providing investors with more active ETFs, Fidelity is looking to meet a growing demand. Last year the firm reviewed the engagements it had with financial advisors with their portfolio construction resources. The firm found that 21% of the advisors it encountered had some allocation to active ETFs in 2023, up from 13% in 2022, which demonstrated a growing desire for active management within the ETF vehicle, McKee said.

“What we’re seeing overall in our conversations with advisors is a significant growing desire for active management to meet the growing demand of these types of solutions in the market,” he said. “In the advisor channel, we’re seeing growing demand for ETFs and, more specifically, active ETFs.”