Fidelity

Fidelity and BlackRock have teamed up, and the alliance could be a formidable one. The move is seen as a move against two huge competitors: Charles Schwab and Vanguard. Schwab recently launched its own proprietary line of ETFs, which it is selling commission-free on its platform. Schwab also lowered commissions on all other trades to $8.95. [BlackRock's ETF Plans.]

Vanguard, meanwhile, has long offered ETFs but also competes with Fidelity for the industry top spot in terms of assets, explains Hannah Glover for Ignites.

This is one of Fidelity’s first major moves into the ETF market after years of sitting on the sidelines. It also solidifies BlackRock’s position as the world’s largest provider of ETFs. It now controls 50% of the $1 trillion ETF, says Morningstar. [ETFs vs. Mutual Funds? No Contest.]

Who’s the big winner in all these moves? That’s you, the ETF investor.

Fidelity’s retail business represents 12 million brokerage accounts. The partnership also bars BlackRock from making any similar deals with other distribution platforms and explains that Fidelity cannot offer other non-proprietary ETFs commission-free. [Fidelity Announces Free Trading.]

For more stories about ETFs, visit our ETF 101 category.

Advisors are increasingly recommending that investors include some commodities exposure as a way to diversify your portfolio, even with their high volatility, comments Ben Baden for U.S. News & World Report. [Why there's upward pressure on commodities.]

Five years ago, they were more of a novelty. Now, with potential inflation and greater demand for commodities around the world, there’s definitely a reason to have between 5% and 10% of your overall allocation in commodities. Nevertheless, it is important to know what you’re getting yourself into. [Commodity ETFs: follow the trend.]

• Risks. Investing solely in commodities exposes you to extreme volatility. However, if you add a small portion to a portfolio, you may benefit from diversification through the low correlation commodities have with more traditional investments, such as stocks and bonds.
• Diversity. Don’t rely on a single commodity investment or get caught up in the new “it” commodity. For example, gold has been getting a lot of attention lately but it is possible that the asset won’t appreciate much more. Most advisors would urge that you get broad exposure to a number of commodities instead.
• Choosing. You can gain exposure to commodities through commodities ETFs or equity-based ETFs with companies that produce the commodity. But be sure to know what the differences are. [The four types of commodity ETFs.]
• Trend Following. With volatile asset classes, you can protect yourself with a strategy. We use trend following by watching the 200-day moving average as a buy and sell signal. [How to follow trends.]

For more information on commodities, visit our commodity category.

• PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC)

• iShares GSCI Commodity Indexed Trust (NYSEArca: GSG)

• PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBA)

• Market Vectors RVE Hard Assets Producers (NYSEArca: HAP)

Max Chen contributed to this article.

• Consumer discretionary
• Consumer staples
• Energy
• Financials
• Health care
• Industrials
• Information technology
• Materials
• Telecommunications
• Utilities

The funds will be made up of subsets of the S&P SmallCap 600 Index. The index includes companies with a market capitalization range of between $250 million and $1.2 billion. [Why small-cap companies have appeal now.]

There are no other small sector ETF suites like this out there, which makes them innovative, and investors could find them especially appealing in this post-recession era. Small-cap stocks have outperformed large-caps over the past 10 years, and they’re also better positioned to take advantage of improving economies. [Micro-caps are another option for ETF investors.]

For more stories about asset class ETFs, visit our asset class ETF category.