Fidelity Investments is introducing three new actively managed, fixed-income exchange-traded funds to the market.
While the Boston-based investment firm has been in the ETF market for 10 years, the latest offerings – The Fidelity Total Bond ETF, Limited Term Bond ETF, and Corporate Bond ETF – are the firm’s first actively managed, fixed-income ETFs.
“While active ETFs are still in their infancy, we are seeing increased demand and believe that the market is ready for more choice in the active approaches offered through the ETF structure,” said Scott Couto, president of Fidelity Financial Advisor Solutions.
Fidelity currently manages $865 billion in fixed-income assets. It also manages $175 billion in ETF assets.
Actively managed ETFs only represent about 1 percent of all ETF assets, with about $17 billion in assets under management. Most of those actively managed funds — 76 percent — are in fixed-income products.
In February of 2012, Pimco rolled out its Total Return ETF, an actively managed fixed-income ETF that had been managed by firm founder Bill Gross, until his recent departure.
Pimco’s Total Return ETF is the largest actively managed fixed-income ETF, with about $3.6 billion in assets.
An SEC investigation into whether Pimco has overstated Total Return ETF returns is reportedly gaining momentum, according to reporting in ThinkAdvisor, BenefitPro’s sister publication.
Fidelity’s three new actively managed fixed-income ETFs will have an expense ratio of 45 basis points, according to a company news release.
In 2013, the average expense ratio for actively managed bond ETFs was 51 basis points, according to Lipper Inc.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
