Fidelity Investments, the firm that lost its position as the biggest U.S. funds provider after ignoring exchange-traded products for years, is seeking to open an actively run ETF lineup starting with a corporate bond fund.
The company, based in
Fidelity could yet become the first major mutual-fund firm to introduce ETFs run by active stock pickers. Once known for its top-ranked equity managers such as Magellan Fund’s
U.S. investors poured
Fidelity had been working toward opening a series of actively managed ETFs modeled on its Select lineup of industry- focused stock funds, a person familiar with the matter said in July. The firm hired
ETFs hold about
Most stock pickers have resisted offering ETF versions of their mutual-fund products because the structure requires revealing almost all holdings every day.
Other firms including
Fidelity’s active ETFs would be fully transparent, according to the filing.
ETFs disclose holdings daily in order to keep their share price in line with the market value of their holdings. When those values diverge, market makers profit on the difference by creating or redeeming shares in large blocks, which moves a fund’s share price back in line with assets. To do that, market makers need to know a fund’s holdings.
Transparency is seen as less a threat to fixed-income funds because it’s more difficult to replicate or front-run managers in the over-the-counter bond market, moves that can eat into profits.
The firm’s largest industry fund with direct ETF rivals, the
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