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Fidelity is expanding the list of exchange-traded funds it subjects to a service fee because the ETF providers haven't agreed to pay the financial giant an asset-based fee to place their funds on its brokerage platform.
Effective June 1, about 140 additional ETFs will be subject to the fee, which amounts to 5% per purchase order, capped at $100, according to a Fidelity list. Another 27 ETFs became subject to the fee in November, the list shows.
ETF providers that don't enter into a support fee agreement are included on the service fee list, which Fidelity updates on a rolling basis. ETF providers on the list may be removed over time. The policy affects dozens of issuers.
The service fee applies only to buy orders and ETF issuers determine whether to pass it to investors. The fee is capped at $100 for purchases valued at $2,000 or higher.
"Fidelity continues to work closely with asset managers, as it's always done, to engage in constructive dialogue and reach outcomes that reflect a more consistent approach across mutual funds and ETFs," a Fidelity spokesperson told ThinkAdvisor by email.
"Support fees help provide exceptional value and customer service for all products on our platform, which operates with research tools, technology capabilities, and security measures to drive a positive experience for investors," the spokesperson said. "The decision to harmonize some of our fee policies comes as our level of support and service for ETFs across the industry is growing rapidly."
Issuers with multiple ETFs on the list include Roundhill, WEBs, Kurv, Inspire and Rareview.
A Morningstar analyst told ThinkAdvisor last year that Fidelity charges most ETF issuers 15% of their expense ratios annually to appear on its platform.
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