Fidelity Investments joins ETF market
The second largest mutual fund provuder, Fidelity Investments, had laid out plans to open the cheapest portfolio of single-industry exchange traded funds. This comes as the firm seeks to enter a market dominated by BlackRock Inc and the Vanguard Group Inc.
On Oct.24, Fidelity would commence trade of ten funds, which represent industries ranging from energy to telecommunications. The said firms would each have an annual expense ratio of 0.12%, which is lower by two percentage points as against the Vanguard Group's offered ETFs. This was confirmed by regulatory documentation filed as well as Bloomberg compiled data. The said ETFs would be managed by BlackRock, the world's largest money manager where a basis point means one-hundredth of a percentage point.
Fidelity had been left behind in terms of assets by both Vanguard and BlackRock in the past half decade. This is due mainly to the growth of index based offers like ETFs. Fidelity, which only has one ETF in its fold, had seen assets in its flagship stock mutual funds erode by 16% in the past five years alongside the decline in management and advisory fees collectible by as much as 13%.
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