The timeline for the conversion of six thematic equity mutual funds from Fidelity focused on different facets of the disruptive innovation theme into ETFs is taking shape. The latest filing by the issuer outlines the details of the funds and their conversion dates.
The first five mutual funds are set to convert into ETFs on Friday, June 9. They include the following:
- Fidelity Disruptive Automation ETF (FBOT)
- Fidelity Disruptive Communications ETF (FDCF)
- Fidelity Disruptive Finance ETF (FDFF)
- Fidelity Disruptive Medicine ETF (FMED)
- Fidelity Disruptive Technology ETF (FDTX)
Then the Fidelity Disruptors ETF (FDIF) will convert on June 16. Each of the newly formed ETFs will have expense ratios of 0.50% post-conversion. That’s half of what the firm charged for the retail share class of each of the mutual funds. All of the funds will list on the NYSE Arca.
Adding up for Fidelity
As of the end of November, when the conversions were first announced, roughly $420 million was invested across the six mutual funds. The broadly based Fidelity Disruptors Fund was the largest, with $101.4 million in assets. The smallest was the company’s Disruptive Communications Fund, with $35.7 million.
In general, the funds seek to identify companies that provide innovation in their respective industries such that they have the potential to displace established companies, according to their prospectus.
The document also notes that the conversions will be tax-free from a federal tax perspective. Investors owning shares of the mutual funds who cannot hold ETFs in their account must provide a separate brokerage account to receive shares in the ETF. If no brokerage account is provided, the investors’ holdings will be liquidated during the conversion process and distributed to them as cash. That, the prospectus says, can come with tax consequences.
A team of seven managers is in charge of the portfolios of the six mutual funds, all of whom will remain the managers of the ETFs post-conversion, the document says.
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