Fidelity Investments said Tuesday that it is expanding its series of low-cost model portfolios for financial advisors with the launch of Target Allocation Index-Focused Model Portfolios, which have an average expense ratio of 0.03%-0.12%, or 3-12 basis points.
This news comes about four months after Fidelity debuted its first Target Allocation Model Portfolios for advisors, which have average expenses of 0.38% to 0.40%. Also, three months ago, the firm rolled out two index funds for investors with zero expense ratios (Fidelity ZERO Total Market Index Fund and Fidelity ZERO International Index Fund).
“When we first launched Fidelity Model Portfolios [on July 12], we wanted to help advisors manage their investments more efficiently so they can spend more time on what clients value most — including one-on-one financial planning,” according to Matt Goulet, senior vice president, Fidelity Institutional Asset Management.
“With the majority of advisors using some form of models to construct their portfolios, this offering gives advisors more options in the model portfolios space — at a lower cost,” he explained.
Advisors can access the latest Fidelity portfolios on both Envestnet’s platform and Fidelity’s Managed Account Solutions platform. They also are available to broker-dealer registered representatives, RIAs, banks advisors and insurance agents offering securities.
There is about $6 trillion in managed-account assets today, according to Cerulli data, and that level is set to grow nearly 15% a year over the next few years. About eight in 10 advisors use models in their portfolios, a recent study supported by Fidelity found.
Fidelity has about $7.4 trillion of assets under administration, including managed assets of $2.6 trillion. It works with about 13,000 financial advisory firms.
“The expansion of Fidelity Model Portfolios reflects the deep, diverse capabilities that Fidelity has to offer — including methodologies using active, passive and a combination of both,” Goulet added.
According to Morningstar, Fidelity topped the active-asset flows chart in September, with an increase of $1.8 billion. Its passive flows were $4.8 billion, putting it in the fourth position behind Vanguard, State Street and iShares.
In September, the Fidelity Advisor Series Growth & Income Fund had inflows of $1.8 billion, for instance, while the Fidelity SAI US Large-Cap Index Fund had outflows of $827 million.
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