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Fidelity Launches 2 New Actively Managed Bond ETFs

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What You Need to Know

  • The two new ETFs reflect an increase in actively managed ETF launches from Fidelity and other asset managers.
  • Unlike some other recent active ETF launches, these funds fully disclose their holdings on a daily basis.
  • Fidelity is

Fidelity Investments has launched two new actively managed ETFs on Thursday: the Fidelity Investment Grade Bond ETF (FIGB) and Fidelity Investment Grade Securitized ETF (FSEC).

Both ETFs are listed on the NYSE Arca and have an expense ratio of 0.36%. Like some other recent Fidelity launches of active ETFs, these two ETFs resemble existing mutual funds and use the same portfolio managers and research teams as those funds. Unlike some other recently launched Fidelity ETFs, however, the two new active bond ETFs are fully transparent, disclosing their holdings daily, rather than with a lag.

Both FIGB and FSEC, like their fund counterparts, seek a high level of current income for investors by normally investing at least 80% of assets in medium and high quality investment-grade debt securities of all types and in repurchase agreements for those securities. FIGB,  however, charges nine basis points lower than its mutual fund counterpart.

Comparison can’t be made for FSEC because its mutual fund counterpart, is part of a series available only to certain other Fidelity funds and Fidelity-managed 529 plans, not to individual investors.

Strong Growth in Actively Managed ETFs

Greg Friedman, Fidelity’s head of ETF management and strategy, said in a statement that the firm has seen “strong growth” in its actively managed ETF lineup and is “excited to offer even more choices while delivering excellent value to financial advisors and individual investors.”

Asked if the new ETFs risk cannibalizing the firm’s existing mutual funds, Friedman told ThinkAdvisor that he has not seen much of that and that clients can “choose the strategy with the wrapper that works for them.”

In many cases, “ETF users are newer clients of Fidelity,” Friedman said.

He said Fidelity is “wrapper agnostic,” committed to the ETF space and constantly looking for  new ETF ideas to serve clients, including ESG, crypto and and macro trends, but he declined to be more specific about the firm’s future ETF plans.

To date, Fidelity has 39 ETFs, including seven actively managed equity ETFs, five actively managed bond ETFs, 15 factor ETFs, 11 passive equity sector ETFs plus Fidelity ONEQ, which tracks the Nasdaq Composite Index.

All of Fidelity’s active equity ETFs are semi-transparent, meaning they disclose their holdings with a lag. They included the Fidelity Fidelity Growth Opportunities ETF (FGRO), Fidelity Magellan ETF (FMAG), Fidelity Real Estate Investment ETF (FPRO) and Fidelity Small-Mid Cap Opportunities ETF (FSMO), which all launched a month ago. All of its actively managed bond ETFs are fully transparent. The firm managed a total $3.8 trillion in assets as of Jan. 31.