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Fidelity unveils plans for its first mutual fund-to-ETF conversions

Fidelity Investments on Wednesday announced plans to convert six actively managed thematic mutual funds into active equity exchange-traded funds next year.

The conversions, expected to be completed in June, would mark the first time that Fidelity has converted mutual funds into ETFs, a Fidelity spokeswoman said.

The change will add six transparent disruptive ETFs to Fidelity’s current active equity ETF lineup of nine funds, which had about $720 million in assets under management as of Oct. 31, she said.

The Fidelity Disruptive Automation Fund, Fidelity Disruptive Communications Fund, Fidelity Disruptive Finance Fund, Fidelity Disruptive Medicine Fund and the Fidelity Disruptive Technology Fund each have June 9 as their expected conversion date, according to a Wednesday filing with the SEC. The Fidelity Disruptors Fund has a June 16 conversion date, the filing shows.

Launched in 2020, Fidelity’s disruptive mutual funds were designed to “invest in innovative business models, emerging industries, and technologies that are changing the status quo,” a Fidelity news release said. The disruptive funds’ assets totaled about $430 million as of Sept. 30, the spokeswoman said.

Fidelity’s move is consistent with an industry trend seen in recent years of managers converting existing mutual funds into ETFs, according to Todd Rosenbluth, head of research at VettaFi, a data and analytics provider, who cited conversions by Dimensional Fund Advisors and J.P. Morgan Asset Management as examples.

“Investor interest has shifted towards ETFs and away from mutual funds,” Mr. Rosenbluth said, adding that he expects to see more mutual fund-to-ETF conversions by Fidelity as well as other asset managers that have an ETF presence. “Asset managers want to skate to where the puck is going.”

As of Sept. 30, Fidelity had assets under administration of $9.6 trillion, including discretionary assets of $3.6 trillion, the spokeswoman said.

Read More: Fidelity unveils plans for its first mutual fund-to-ETF conversions

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