Fidelity Investments seems to be slowly but surely moving toward a major expansion of its ETF business.
The Boston-based financial services giant has filed to launch active ETFs that would invest in corporate bonds and mortgage-backed securities, report Cinthia Murphy and Olly Ludwig at IndexUniverse.
According to a recent SEC filing, Fidelity is planning an actively managed Fidelity Mortgage Securities ETF, which will hold investment-grade mortgage-related securities and repurchase agreements for those securities. [Fidelity Cleared to Launch Active ETFs: Report]
Specifically, the mortgage securities ETF will invest in U.S. government securities and will have similar overall interest rate risk to the Barclays U.S. MBS Index.
Additionally, the fund managers will allocate assets across varying market sectors and maturities and analyst credit quality of the issuer, current and future valuations, and trading opportunities.
The fund can also utilize derivatives, forward-settling securities, interest rate swaps, total return swaps, credit default swaps, options and futures contracts to increase or decrease the fund’s exposure to changing security prices, interest rates, credit qualities or other factors.