Mutual fund giant Fidelity made its first sizable entry into the exchange traded products industry in late October with the introduction of 10 sector funds.
Backed by a partnership with BlackRock, Fidelity’s sector ETF effort faces intense competition from established providers of sector ETFs. State Street’s (STT) State Global Advisors and Vanguard are the two dominant providers of U.S.-focused sector ETFs while BlackRock’s iShares has own strong lineup of sector funds. [Fidelity Sector ETFs Look to Challenge Bigger Rivals]
Still, after nearly six months on the market, it is fair to say Fidelity’s sector ETFs are off to solid starts. As of March 4, Fidelity 10 sector ETFs had nearly $481 million in combined assets under management, according to XTF data.
The Fidelity MSCI Health Care Index ETF (FHLC) has benefited from investors flocking to ETFs tracking health care, the S&P 500’s top-performing sector this year. FHLC had $114.4 million in assets as of March 4, according to XTF data, making it the only one of the Fidelity sector to funds to have thus far crossed the $100 million mark. [Health Care ETFs Lead Market Higher]
With nearly $80 million in assets, the Fidelity MSCI Information Technology Index ETF (FTEC) should be the next Fidelity sector ETF to hit $100 million in assets. FTEC is the second-largest of the 10 ETFs with a sizable lead over the $53.6 millio n Fidelity MSCI Industrials Index ETF (FIDU) . [Fidelity Makes Its ETF Presence Felt]
Fidelity sector ETFs do have at least one key advantage in the ultra-competitive sector ETF space: Cost. Each of the 10 funds charges just 0.12% per year, the lowest annual fees among sector ETFs. With the exception of the Vanguard Financials ETF (VFH) , which charges 0.19% per year, Vanguard’s other sector ETFs charge 0.14%.
Fidelity’s cost advantage could be short-lived. Vanguard, the third-largest U.S. ETF sponsor, is never shy about lowering costs as its ETFs gather more assets and SSgA recently pared expenses on the nine sector SPDRs. [State Street's Stealthy Fee Cut]
On a combined basis, Fidelity’s sector ETF suite is off to a solid start, indicating a combination of low fees, commission-free availability to Fidelity clients and the firm’s massive distribution network have proven advantageous.
The Fidelity MSCI Telecommunication Services Index ETF (FCOM) is the smallest of the Fidelity ETFs with $17.7 million in assets.
Fidelity MSCI Health Care Index ETF
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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