Fidelity Converts 6 Mutual Funds to ETFs

The world’s fourth largest asset manager also slashed expense ratios for equity factor ETFs.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Fidelity Investments today announced the launch of six new active exchange-traded funds that previously traded as mutual funds, in a further acceleration toward a more flexible exchange-traded format. 

The Boston-based firm, with $36 billion in ETF assets before the current conversions, also announced it chopped total expense ratios for its 13 equity factor ETFs in half, a move it said would save investors $6 million annually. 

As ETFs grow in popularity, asset managers are increasingly looking towards mutual fund conversions as one option to get the investment vehicles to market. By offering an ETF wrapper of popular mutual funds, firms can offer cheaper, more liquid versions of products they know investors are interested in.

The batch of actively managed ETFs will be commission-free and begin trading on Nov. 20, according to a press release, and is part of Fidelity’s plan announced in June to convert its actively managed Enhanced Index mutual fund suite. 

Fidelity Reaches 64 ETFs in Lineup

The suite includes small-, mid-, and large-cap equities, as well as an international fund, and expands Fidelity’s lineup to 64 ETFs. The enhanced ETFs will have expense ratios ranging from 0.18% to 0.28%.

“We listen to client demands very closely, and they like the ETF wrapper,” Greg Friedman, Head of ETF Management and Strategy at Fidelity, said in an interview. “It’s tax efficient, it’s lower cost, tradability to it, there is a transparency to it, so we think ETFs are going to continue to grow.”

About 40 mutual funds have been transformed since the first formal mutual-fund-to-ETF conversion by Guinness Atkinson in 2021, according to etf.com data.

Fidelity's largest fund is the Fidelity MSCI Information Technology Index ETF (FTEC) with $6.79 billion in assets.

Bloomberg Senior Analyst Eric Balchunas has predicted about $1 trillion in conversions over the next decade. 

Contact Lucy Brewster at [email protected]

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.