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Fidelity Launches First Model Portfolios With ETFs

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Fidelity Investments has introduced its first model portfolios that include ETFs, reflecting growing demand from advisors who are increasingly outsourcing asset management and favoring tax-efficient vehicles.

The Fidelity Bond Income Model Portfolio and Fidelity Multi-Asset Income Model Portfolio both focus on generating income without excessive risk. In addition to ETFs in their mix, the portfolios include active and passive funds. They are available in two institutional share classes — I and Z — and their expense ratios range from 0.52 to 0.63%.

“We’re always looking for new ways to help advisors serve their clients,” said Matt Goulet, senior vice president at Fidelity Institutional Asset Management and head of the firm’s Model Portfolios, in a statement. “These income models are designed to address an ever broader range of clients’ investment needs.” They help to reduce risk and add tax efficiency, according to Goulet.

They also help round out a Fidelity’s existing Model Portfolios launched last year — five strategies that also include active and passive funds, but no ETFs.

The newly launched model portfolios consist primarily of Fidelity funds but both include one outside investment, the iShares U.S. Preferred Stock ETF. Both portfolios also include high-yield corporate and emerging market bond funds and a long-term Treasury fund. The multi-asset portfolio alone includes two high dividend stock ETFs and a floating-rate high-income fund.  They will generally rebalance twice a year unless circumstances warrant additional reallocations.

Advisors can access these and other Fidelity Model Portfolios though a TAMP like Envestnet or directly from Fidelity; they don’t have to be custodial or clearing clients of the firm.

Goulet expects the trend toward model portfolios will continue as more advisors seek to add value for clients outside of asset management.

Fidelity Model Portfolios are available to advisors at broker-dealers, RIAs, banks and insurance companies, and nearly 100 advisory firms have access to these portfolios through turnkey asset management platforms. As of Dec. 31, Fidelity, the world’s fourth largest asset manager,  had $2.4 trillion assets under management, and almost three times that amount under administration.

— Check out Women in WealthTech: Lisa Burns of Fidelity Institutional on ThinkAdvisor.


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