Fidelity’s New ETFs Put Vanguard on Notice
October 24th at 11:44am by Tom Lydon
Mutual fund giant Fidelity made its first sizable foray into the exchange traded products industry today with the debut of 10 sector ETFs. BlackRock (NYSE: BLK), the largest U.S. asset manager, is the sub-advisor for the Fidelity sector ETFs.
Fidelity and iShares already have a partnership that includes the former offering some iShares ETFs to its clients on a commission-free basis. Earlier this year, the number of iShares ETFs available commission-free to Fidelity clients was more than doubled to 65. [Fidelity, iShares Deepen Ties]
State Street’s (NYSE: STT) State Global Advisors and Vanguard are the two dominant providers of U.S.-focused sector ETFs and Vanguard has challenged its larger ETF rivals by offering some of the lowest fees in the business. With the exception of the Vanguard Financials ETF (NYSEArca: VFH), which has an annual expense ratio of 0.19%, Vanguard’s sector funds charge 0.14% a year. [Vanguard on ETF Fee War]
Popular sector SPDRs such as the Financials Select Sector SPDR (NYSEArca: XLF) and the Consumer Staples Select Sector SPDR (NYSEArca: XLP) charge 0.18% per year. Bottom line: The big news with the launch of Fidelity’s sector ETFs may not be so much that Fidelity has significantly bolstered its ETF presence, but that it is charging less than Vanguard.
The 10 Fidelity sector funds, featured in the chart below, charge 0.12%, per year. All of the ETFs are listed on the New York Stock Exchange.