Fidelity Investments is the latest asset manager to bring to market actively managed nontransparent ETFs.
Fidelity today introduced three such equity ETFs, each charging a 0.59% expense ratio: the Fidelity Blue Chip Growth ETF (FBCG), Fidelity Blue Chip Value ETF (FBCV) and Fidelity New Millennium ETF (FMIL). They are the firm’s first actively managed equity ETFs.
All three are available commission free, trade on the Cboe BZX Exchange and use a tracking basket methodology that allows the ETF to trade without disclosing its actual holdings on a daily basis as most ETFs do. The tracking basket will include some but not all of the ETF holdings and will be published daily on the ETF’s website along with its overlap with the actual holdings of the ETF on the prior business day. The actual ETF holdings will be published monthly with a 30-day lag on the Fidelity website.
The three new active equity ETFs “harness the power of Fidelity’s 74-year-old legacy of active management delivered with the tax efficiency, trading flexibility and potential cost efficiency benefits ETF vehicles offer,” said Greg Friedman, the firm’s head of ETF management and strategy. The firm’s legacy of active management includes actively managed equity mutual funds, bond mutual funds and ETFs.
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At the Inside ETFs conference in late January, Friedman described the advent of nontransparent ETFs as “the next evolution” of ETFs, “how you get active strategies in equity form.” He explained, “There have been active strategies to date with fixed income — very successful, but now we’re able to bring as an industry to our clients and our shareholders active equity for ETFs.”