Fidelity Files to Launch Sector ETFs Subadvised by BlackRock

ETF Trends

Ever since Fidelity Investments and BlackRock announced a deeper partnership in March, Fidelity hinted at engineering new exchange traded funds, and now the firm has finally pulled the trigger with a filing Friday.

Interestingly, BlackRock (BLK) will be the subadvisor for the planned Fidelity sector ETFs. BlackRock oversees the iShares ETFs.

Fidelity filed for exemptive relief with the Securities and Exchange Commission to launch 10 U.S. sector-specific ETFs.

  • Fidelity MSCI Consumer Discretionary Index ETF tries to reflect the performance of the MSCI USA IMI Consumer Discretionary Index.
  • Fidelity MSCI Consumer Staples Index ETF tries to reflect the performance of MSCI USA IMI Consumer Staples Index.
  • Fidelity MSCI Energy Index ETF tries to reflect the performance of MSCI USA IMI Energy Index.
  • Fidelity MSCI Financials Index ETF tries to reflect the performance of MSCI USA IMI Financials Index.
  • Fidelity MSCI Health Care Index ETF tries to reflect the performance of MSCI USA IMI Health Care Index.
  • Fidelity MSCI Industrials Index ETF tries to reflect the performance of MSCI USA IMI Industrials Index.
  • Fidelity MSCI Information Technology Index ETF tries to reflect the performance of MSCI USA IMI Information Technology Index.
  • Fidelity MSCI Materials Index ETF tries to reflect the performance of MSCI USA IMI Materials Index.
  • Fidelity MSCI Telecommunications Services Index ETF tries to reflect the performance of MSCI USA IMI Telecommunications Services 25/50 Index.
  • Fidelity MSCI Utilities Index ETF tries to reflect the performance of MSCI USA IMI Utilities Index.

As a mutual fund provider, Fidelity Investments is known for its line of actively managed sector funds.

“Fidelity hired BlackRock to leverage its passive investment management expertise and scale, allowing us to get to market faster,” said Fidelity spokeswoman Nicole Goodnow in a statement, reports Jackie Noblett for Ignites. [Fidelity, BlackRock in ETF Partnership]

“It also is more cost efficient than building these capabilities ourselves, while providing our customers access to world-class passively managed ETF products,” the Fidelity spokeswoman told Ignites. She added that the partnership will allow Fidelity to focus on the smart beta and actively-managed segments of the ETF market, according to the story.

BlackRock iShares also has a suite of sector-specific ETFs of its own. The iShares sector ETFs is based on Dow Jones indices and come with a 0.47% expense ratio. The Fidelity filing didn’t disclose fees for the planned sector ETFs. [Tom Lydon Discusses the Fidelity-BlackRock ETF Deal]

Kathleen Murphy, president of personal investing at Fidelity Investments, has previously stated that the firm would partner with iShares to launch passive ETF sector funds. He also said that Fidelity will also focus on active ETFs and smart-beta ETFs as well. [Fidelity, iShares Expand ETF Partnership: What Does it Mean?]

Fidelity currently manages one ETF, Fidelity Nasdaq Composite Index (ONEQ) .

In March, Fidelity and iShares expanded their “strategic” partnership to included a more commission-free ETFs on the Fidelity brokerage platform. The new suite of Fidelity sector ETFs could also trade commission free on the platform, which would help the new offerings compete against current sector ETFs.

For more information on new product launches, visit our new ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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