Last week, exchange traded fund industry observers speculated on Fidelity Investments’ plans to convert its popular sector mutual funds into actively managed ETF options. With capable managers at the helm, the active ETF options may be viable contenders, according to S&P analysts.
“Fidelity has a strong presence with its sector- and industry-focused mutual funds,” Todd Rosenbluth, S&P Capital IQ ETF Analyst, said in a research note. “If it were to enter the ETF landscape, we think there is some room for market share gain, but expense ratios might be a big driver of how successful it could be.”
Bloomberg previously reported that Fidelity is planning active ETFs based on the company’s sector funds. It is assumed that Anthony Rochte, who was hired from State Street in March, would oversee the ETF unit. [Fidelity Reportedly Preparing Active ETFs]
Of the 22 Fidelity Select funds with an established manager who has overseen his or her respective funds for over three years, 14 of the funds have an above average track record. Nevertheless, it should be noted that past performances are not indicative of future gains.
When comparing ETFs and mutual funds, most investors will go over the fees. Since ETFs passively track an index, the costs are substantially lower, but actively managed ETFs may issue higher fees.