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Fidelity to List Crypto- and Metaverse-Themed ETFs Next Week

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What You Need to Know

  • The Fidelity Crypto Industry and Digital Payments ETF (FDIG) will be available to advisors and investors on or about April 21.
  • The new ETF will not offer investors direct exposure to crypto.
  • Also new from the firm are a Fidelity Metaverse ETF (FMET) and five new fixed income sustainable offerings.

Fidelity Investments will start listing thematic ETFs on cryptocurrency and the metaverse on or about April 21, it said Tuesday. But the firm’s plans to offer an ETF providing direct exposure to crypto remained up in the air.

The Fidelity Crypto Industry and Digital Payments ETF (FDIG) and Fidelity Metaverse ETF (FMET) are among seven new funds that the firm plans to launch next week.

The other five funds are the Fidelity Sustainable Core Plus Bond Fund (FIAEX), Fidelity Sustainable Core Plus Bond ETF (FSBD), Fidelity Sustainable Low Duration Bond Fund (FAPGX), Fidelity Sustainable Low Duration Bond ETF (FSLD) and Fidelity Sustainable Intermediate Municipal Income Fund (FSIKX).

All seven of the new funds are for individual investors and financial advisors to buy commission-free via Fidelity’s online brokerage platforms.

Fidelity’s Crypto Path

Fidelity filed applications with the Securities and Exchange Commission for the two new thematic ETFs in January.

The Fidelity Crypto Industry and Digital Payments ETF will “normally invest at least 80% of assets in equity securities included in the Fidelity Crypto Industry and Digital Payments Index and in depositary receipts representing securities included in the index,” the company said Tuesday.

The Fidelity Crypto Industry and Digital Payments Index was designed to “reflect the performance of a global universe of companies engaged in activities related to cryptocurrency, related blockchain technology, and digital payments processing,” Fidelity said.

The Fidelity Crypto Industry and Digital Payments ETF, which it pointed out “will not offer direct exposure to cryptocurrency,” provides an “opportunity to invest in companies that support the broader digital assets ecosystem, including those involved in crypto mining and trading, blockchain technology, and digital payments processing,” the firm said Tuesday.

Fidelity Investments was one of the first asset managers to engage with cryptocurrencies.

The firm introduced the Wise Origin Bitcoin Index Fund I in 2020, but that was available only to qualified purchasers with a minimum $100,000 investment.

Fidelity filed an application with the SEC in March 2021 to launch a Bitcoin ETF, joining a growing number of other, though smaller, firms that had done the same.

According to the March 2021 filing, the Wise Origin Bitcoin Trust would track the performance of Bitcoin as measured by the Fidelity Bitcoin Index PR, which continually updates Bitcoin prices throughout the day based on feeds from multiple spot markets and a volume-weighted median price methodology. Fidelity Digital Assets Services, which launched in late 2018, would serve as custodian.

But the SEC rejected Fidelity’s application to trade the Wise Origin Bitcoin Trust in January, just as the agency had rejected prior spot Bitcoin ETFs, based on concerns that the ETF design could not prevent potential fraud or manipulation and could therefore pose a threat to investors and the public interest.

A week earlier, the agency rejected SkyBridge Capital’s application to trade a spot Bitcoin ETF.

One day after Fidelity’s spot Bitcoin ETF was rejected by the SEC, the firm filed an application for the crypto-themed ETF.

Fidelity didn’t have an update on its plan for the Wise Origin Bitcoin Trust, it said Tuesday.

Fidelity had started its exploration of blockchain technology in 2014 with Bitcoin mining and in 2018 launched its first commercial offering, Fidelity Digital Assets, a platform offering custody and trade execution for digital assets to institutional investors.

In 2020, Fidelity’s digital asset management business launched a private Bitcoin fund that is still available to accredited investors.

The new ETF offering will enable a wider set of investors to participate in the emerging digital assets ecosystem via exposure to related equity securities, Fidelity said.

Metaverse Momentum

The Fidelity Metaverse ETF, meanwhile, can “help investors invest in the evolution and future of the internet,” according to the firm.

It provides “access to companies that develop, manufacture, distribute, or sell products or services related to establishing and enabling the metaverse, such as computing hardware and components, digital infrastructure, design and engineering software, gaming technology and software, web development and content services, and smart phone and wearable technology,” the firm said.

The metaverse-themed ETF will “normally invest at least 80% of assets in securities included in the Fidelity Metaverse Index and in depositary receipts representing securities included in the index,” Fidelity said.

“Metaverse” is a term used to describe a future state of the internet characterized by a network of augmented reality and virtual worlds that can be experienced persistently and in a shared environment by large numbers of users.

The new passively managed crypto and metaverse-themed ETFs will have expense ratios of 0.39%, which Fidelity said is the lowest available for ETFs of their kind. They are self-indexed ETFs, using Fidelity’s proprietary indexes, “constructed by Fidelity’s quantitative investing team, to identify equity securities that offer exposure to these rapidly growing industries,” it said.

With the launch, Fidelity will offer 51 ETFs in all, with over $33 billion in assets under management.

The Other New Funds

Fidelity’s five new sustainable fixed income mutual funds and ETFs will use the firm’s proprietary environmental, social and governance ratings frameworks, along with third-party ESG ratings, to evaluate an issuer’s sustainable business practices, it said. The mutual funds will have retail and advisor share classes.

With their listings, Fidelity’s sustainable lineup will include 22 funds, including thematic sustainable funds that focus on a specific ESG theme and broad sustainable funds that include all three ESG themes, it said.

Fidelity Investments had total assets under administration of $11.1 trillion, including discretionary assets of $4.2 trillion, as of Feb. 28, the company said.

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