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Portfolio > ETFs

Fidelity to Convert 6 Enhanced Index Funds to ETFs

By Jeff Berman

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Fidelity is converting six of its actively managed enhanced index funds into equity exchange-traded funds, effective Nov. 17, the company disclosed Wednesday in a filing with the Securities and Exchange Commission.

In a supplement to the company’s prospectus for the Fidelity Small Cap Enhanced Index Fund, the firm said it will be converted from a mutual fund to an ETF.

Fidelity says it believes the conversion will “provide multiple benefits for investors of the Fund, including lower expenses, additional trading flexibility, increased portfolio holdings transparency and the potential for enhanced tax efficiency.”

After the reorganization is completed, the fund will be liquidated, according to the filing.

“Given the ETFs are not yet converted, we are not able to share details on expense ratios at this point,” a Fidelity spokesperson told ThinkAdvisor on Thursday.

For existing shareholders of the fund whose accounts can hold an ETF, their fund shares will be automatically converted, Fidelity said.

At a meeting on June 14, the Board of Trustees of Fidelity Commonwealth Trust II approved on behalf of the fund, the reorganization of the fund into an ETF, which will continue to be managed by Fidelity Management & Research Co., the company said.

The fund will be reorganized into a newly created ETF, Fidelity Enhanced Small Cap ETF, that Fidelity said is a series of Fidelity Covington Trust.

The fund and ETF have “identical investment objectives, fundamental investment policies and principal investment strategies” according to Fidelity.

The six enhanced index funds being converted to ETFs are:

  • Fidelity International Enhanced Index Fund (FIENX) to the Fidelity Enhanced International ETF.
  • Fidelity Large Cap Core Enhanced Index Fund (FLCEX) to the Fidelity Enhanced Large Cap Core ETF.
  • Fidelity Large Cap Growth Enhanced Index Fund (FLGEX) to the Fidelity Enhanced Large Cap Growth ETF.
  • Fidelity Large Cap Value Enhanced Index Fund (FLVEX) to the Fidelity Enhanced Large Cap Value ETF.
  • Fidelity Mid Cap Enhanced Index Fund (FMEIX) to the Fidelity Enhanced Mid Cap ETF.
  • Fidelity Small Cap Enhanced Index Fund (FCPEX) to the Fidelity Enhanced Small Cap ETF.

Photo: Shutterstock

Jeff Berman

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