The stars are aligning for Fidelity Investments to start its home-grown family of exchange-traded funds.
Sure, the Boston mutual fund giant recently expanded its program of making commission-free and low-fee ETFs from BlackRock available through its online marketing platform and its advisors.
But if it's going to keep up with BlackRock, now the biggest ETF player, and Vanguard Group, which has overtaken it as the broadest-based fund company, that's got to change.
It's been a secret to almost no one that Fidelity has got an ETF development team at work far away from Boston. Which brings us to the stars.
Thirteen months ago, Fidelity rehired Anthony Rochte from State Street Corporation. Rochte was senior managing director at the firm's money management unit and helped run its line-up of ETFs, second only in scope to BlackRock's products.
Rochte is at work in Denver, at a Fidelity unit called SelectCo., which has as its mandate the creation of sector funds. He appears to be getting a hand from another star, Greg Friedman, who spent more than 10 years at BlackRock in its iShares ETF business.
Fidelity is not new to the sector fund game. Fidelity manages $39 billion in 60 sector-focused mutual funds in its Select series.
What's distinctive here is that SelectCo. will roll out both actively managed and passively managed ETFs, according to Fidelity spokesman James Aber.
Indeed, in December, it sought approval to launch a series of actively managed funds, with the first being a Fidelity Corporate Bond ETF.
The timing could be propitious, even though it's been common to critique Fidelity for being late to the ETF ball game. Active ETFs are just getting started, accounting for less than 1% of the $1.4 trillion held in ETFs in the United States.
Roughly half that-$669 billion-is held in sector ETFs, notes Aber.
Plus, what if the Securities and Exchange Commission approves the Eaton Vance's proposals to create Exchange Traded Managed Funds?
These actively managed ETFs would only disclose their holdings quarterly, just like mutual funds.
Then, suddenly, Fidelity is not a latecomer.
It would be at the vanguard of active trading in ETFs.
