Fidelity undercuts SPDR, Vanguard with launch of low cost US sector ETFs

Oct 25th, 2013 | By | Category: Equities

Fidelity Investments, a leading global asset management firm with $1.9 trillion in managed assets, has made a significant and long-awaited play in the exchange-traded funds space with the launch of 10 passively managed US sector ETFs on the NYSE.

Fidelity has made its long-awaited foray into the world of ETFs with the listing of 10 US sector ETFs on the NYSE.

Fidelity has made its long-awaited foray into the world of ETFs with the listing of 10 US sector ETFs on the NYSE. (© Grk1011)

With total expense ratios of just 0.12 percent, the new ETFs become the industry’s lowest-cost US sector ETFs, undercutting current segment price leaders SSgA SPDR and Vanguard.

Further enhancing the products’ competitiveness, Fidelity has made the ETFs available to be purchased commission-free online through the firm’s brokerage platforms.

MSCI is the index provider to the ETFs, which track the 10 major equity sectors forming the MSCI USA Investable Market Index.

The ETFs cover about 99 percent of the US investable equity market, including small cap stocks. The sectors tracked are consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, telecommunication services and utilities

The new products complement Fidelity’s existing line-up of 44 actively managed sector mutual funds, which have more than $50 billion in assets.

Anthony Rochte, president of SelectCo, the company’s dedicated sector investing division, said: “Since the financial crisis five years ago, investors and advisors have told us that they are looking for additional ways to diversify their portfolios and get exposure to specific industries outside of the typical cap-weighted or style specific options such as large or small cap, or growth and value.”

He continued: “Our new passive sector ETFs can provide for that diversification, serving as building blocks to help investors and advisors find new ways of generating alpha through asset allocation and better manage portfolio risk.”

While many industry commentators see Fidelity as a “Johnny-come-lately” player to the ETF game, the fund giant has outlined ambitious plans to catch up. This includes a move into the active ETF space – a genre where Fidelity’s reputation as a reliable manager of active funds may stand it in good stead – to be spearheaded by the launch of five actively managed fixed income ETFs currently awaiting SEC approval.

The full line-up of ETFs is as follows:

Fidelity MSCI Industrials Index ETF (FIDU)
Fidelity MSCI Health Care Index ETF (FHLC)
Fidelity MSCI Financials Index ETF (FNCL)
Fidelity MSCI Information Technology Index ETF (FTEC)
Fidelity MSCI Telecommunication Services Index ETF (FCOM)
Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
Fidelity MSCI Consumer Staples Index ETF (FSTA)
Fidelity MSCI Energy Index ETF (FENY)
Fidelity MSCI Materials Index ETF (FMAT)
Fidelity MSCI Utilities Index ETF (FUTY)

BlackRock has been appointed sub-adviser for the ETFs.

Tags: , , , , , , ,

Leave a Comment



More in Equities
Poland promoted to developed economy by FTSE Russell
Poland promoted to developed economy by FTSE Russell

Index provider FTSE Russell has announced the results of its annual review of country classifications. The standout change is the reclassification of Poland...

MSCI launches factor ESG index series
MSCI launches factor ESG index series

MSCI has announced the launch of a new range of indices, the MSCI Factor ESG Target Index Series, designed to provide exposure to...

Close