In mid-November, Fidelity Investments joined the select ‘$100 billion in ETF assets’ club. While the firm still has a sizable presence in the mutual fund world, Fidelity’s ETFs have been gaining traction in 2024. We think the future for Fidelity’s ETF business is bright.
“Fidelity is committed to providing exceptional value through products that can help meet customers’ evolving needs,” Greg Friedman, head of ETF management and strategy at Fidelity Investments explained to TMX Vettafi. “Reaching this milestone is a testament to Fidelity’s leadership in this space and the continued demand for innovative strategies.”
Bitcoin ETFs in Demand
Fidelity’s largest ETF launched in January 2024. The Fidelity Wise Origin Bitcoin Fund (FBTC ) has $17 billion in assets as of November 18. A hefty portion of this is due to the rise in the price of bitcoin. However, FBTC added $11 billion of new money in just over 10 months.
We believe the prospects for FBTC and peer ETFs remain strong. VettaFi has hosted multiple bitcoin-focused virtual events thus far in the fourth quarter. Many advisors are interested in learning about how bitcoin can fit into a client portfolio but currently do not have any exposure to the cryptocurrency.
Actively Managed Fixed Income ETF Delivering Value
The Fidelity Total Bond ETF (FBND ) is Fidelity’s second largest ETF. With $16 billion, FBND is also one of the industry’s largest actively managed fixed income ETFs. The ten-year old FBND added more than $9 billion of net inflows during the year. The active fund was outperforming the Bloomberg Barclays Aggregate Bond index on a one- and three-year total return basis as of November 18.
As of the end of September 2024, FBND had relatively high exposure to corporate bonds and relatively low exposure to U.S. government bonds and mortgage pass through securities. The ETF can also own non-investment-grade bonds. FBND recently had approximately 10% of its assets in such bonds. Fidelity also offers other duration or credit focused active fixed income ETFs.
Investors Turned to Fidelity for Tech Exposure
The Fidelity MSCI Information Technology ETF (FTEC ) had $13 billion in assets. With a fee of just 0.08%, FTEC is cheaper than many other sector ETFs. The technology sector has been in favor during 2024, adding to the ETF’s appeal. FTEC added $2 billion of new money and was up 25% in value.
FTEC owns large stakes in Apple, Microsoft, and NVIDIA, but has exposure to small- and mid-cap information technology stocks as well. The multi-cap approach could be appealing if the market broadens out in 2025. Fidelity offers a full suite of sector ETFs, which could also be helpful if investors rotate from tech to another sector in 2025.
Broad Base of ETF Assets
While these three ETFs are the firm’s largest, Fidelity’s asset base is diversified. According to VettaFi, the firm had more than 20 ETFs with more than $1 billion in assets. The list of popular funds includes actively managed equity funds like the Fidelity Enhanced Large Cap Growth (FELG ), smart-beta index ETFs like the Fidelity High Dividend ETF (FDVV ), and other sector funds like the Fidelity MSCI Health Care Index ETF (FHLC ).
Fidelity has expanded its lineup of ETFs through new launches and mutual fund conversions over the last few years. Such efforts have helped make them a preferred partner for advisors and end investors seeking strategic and tactical allocations. For those tax-loss harvesting from mutual funds, Fidelity may be the right firm too.
Congrats, Fidelity, on hitting the $100 billion mark for ETFs. We can’t wait to see what’s next.
For more news, information, and strategy, visit VettaFi | ETFDB.
