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Fidelity Debuts Three Active Fixed Income ETFs


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Mutual fund giant Fidelity Investments is taking its ETF game up a notch.

This time it's leveraging the investment capabilities it's best known for: active fixed-income management.

The Massachusetts-based company on Thursday launched its first suite of actively managed bond ETFs :Fidelity Total Bond ( FBND ),Fidelity Limited Term Bond ( FLTB ) andFidelity Corporate Bond ( FCOR ).

"These funds essentially cover the entire duration spectrum of the investment-grade market," said Bob Brown, president of Fidelity's bond division.

The new ETFs complement three Fidelity active fixed-income mutual funds. They will share the same management teams as their similarly named mutual fund counterparts.

"We've taken our distribution platform, investment expertise and performance together and put it into an ETF offering," Brown said in a phone interview with IBD.

That ETF wrapper means investors get the added benefits of intraday liquidity, holdings transparency and ability to short and use options, he added.

Backed by experienced portfolio managers, "our new (actively managed) funds also offer investors and advisers the potential to outperform an index," while providing risk-adjusted returns, Brown said.

FBND, described as "a true, core fixed-income strategy," takes on the largest actively managed fixed-income bond ETF -- the $2.8 billionPimco Total Return ( BOND ), managed until recently by bond king Bill Gross. Is Fidelity horning in on Pimco's recent troubles ? Maybe not: It first filed plans to launch these new ETFs with the Securities and Exchange Commission in early 2013.

Actively managed ETFs hold $17 billion in assets, or roughly 1% of total ETF assets. But the space, Brown noted, "has a lot of growth opportunity," especially with fixed income comprising approximately 73% of actively managed ETFs.

Fidelity's actively managed ETF offerings are debuting almost exactly a year after the firm launched 10 passively managed sector ETFs. Those funds crossed the $1 billion mark in near-record time -- about eight months.

The expense ratio on each new ETF is 0.45%. They can be traded commission-free through a Fidelity online broker age platform.

New ProShares ETF

Also new to the trading floor Thursday:ProShares Morningstar Alternatives Solution ETF ( ALTS ).

ProShares, a leading provider of alternative ETFs, says ALTS provides a broad range of alternative strategies. When added to a traditional stock and bond portfolio, it aims to enhance risk-adjusted returns.

ALTS is an ETF of ETFs. It tracks a Morningstar index covering strategies that include hedge fund replication, long-short equity, merger arbitrage, managed futures and private equity.

ProShares launched in 2006 and offers more than 140 alternative ETFs.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , ETFs
Referenced Symbols: FBND , FLTB , FCOR , BOND , ALTS




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