Although the ETF industry is flooded with innovative products, the large size and distribution can help. Fidelity has both of these traits working for it. The most successful active ETFs trading, PIMCO Total Return (NYSEArca: BOND) and WisdomTree Emerging Markets Local Debt (NYSEArca: ELD), have tracked the bond market. Case in point, Fidelity is also using this sector as an entry point. [ETF Investing Ideas for 2013]
Fidelity is also going a step further and introducing actively managed sector ETFs. The catch? Fidelity’s managers will have to beat the equivalent passive ETF to prove that the higher cost of active management is worth the expense. So far, the active ETFs will be cheaper than the 1% that mutual funds charge, but more than the average 0.18% that a sector ETF costs. [PIMCO Total Return ETF Manager Gross Trims Mortgages, Treasuries]
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own BOND.
