Fidelity Investments’ 10 passively managed sector exchange-traded funds (ETFs) have surpassed USD1 billion in managed assets since trading began eight months ago.
A significant portion of Fidelity’s asset growth occurred in the past three months with individuals and advisors investing more than USD500 million in the ETFs.
In addition, six of the 10 ETFs have each accumulated more than USD100 million in assets under management, including the largest – Fidelity MSCI Health Care Index ETF (FHLC) – at USD172 million.
Fidelity’s US sector stock ETFs, which continue to offer the industry’s lowest total expense ratio at 0.12 per cent, are available to individual investors and registered investment advisors (RIAs) to buy commission free online through one of Fidelity’s brokerage platforms.
“As investment advisors, we’re looking to provide our clients with solutions that help diversify portfolios and are cost-effective,” says David Haviland, portfolio manager at Beaumont Capital Management. “Sector investing is an effective and targeted approach that we frequently use to gain exposure to specific segments of the economy – whether it is for growth or to manage portfolio risk. With Fidelity’s deep sector heritage and the low-cost sector ETFs, it was clear these solutions would deliver value to our clients.”
“Surpassing the USD1 billion milestone in such a short period of time clearly demonstrates the growing demand for sector investments,” says Anthony Rochte, president of SelectCo, Fidelity’s dedicated sector investing division. “We expect interest in sector investing, whether through our ETFs or our 44 actively managed sector mutual funds, to continue as individual investors and advisors seek to diversify their portfolios and use sectors as building blocks to help generate potential alpha and manage portfolio risk.”
As part of its broader strategic relationship, Fidelity, which has USD2 trillion in managed assets, uses BlackRock as the sub-advisor for its 10 passive sector ETFs, leveraging the firm’s passive investment management expertise and scale.
Fidelity also offers 44 actively managed sector mutual funds with USD71 billion in assets, up nearly 39 per cent from one year ago.
Fidelity also expanded its extensive suite of in-depth sector research and market commentary for investors and advisors on dedicated micro sites on fidelity.com and advisor.fidelity.com, with the launch of Fidelity’s Quarterly Sector Update. The new report leverages proprietary research from across Fidelity and provides investors a snapshot of the relative performance potential of the 10 market sectors based on five key factors: relative strength, momentum, relative valuations, fundamentals and business cycle. The Q2 2014 report identifies the technology, industrials and health care sectors as best positioned for investment opportunities.
“Fidelity’s strategy will continue to be about offering our millions of brokerage customers and thousands of advisor clients a comprehensive suite of investment products and solutions to help them meet their diverse investment needs,” says Rochte. “Our expansive sector capabilities span from the industry-leading sector line up of ETFs and actively managed mutual funds to Fidelity’s sector research and investing tools and are all at the core of helping advisors and individual investors leverage sectors in their portfolios.”
