Fidelity Investments has added six new strategies to its retail wealth separately managed accounts roster. Half of the new SMA strategies focus on fixed income and the other half on equities. The latest launches bring the number of Fidelity SMAs to 14.
“SMAs are an important offering for us. They have a lot of appeal for investors who are looking to Fidelity to manage their assets, but to do so on a single asset class basis,” said Peter (Skip) Wiemeyer, Fidelity’s head of managed solutions. “We have a number of products in most of the major asset classes today. This latest rollout was just adding a few more strategies to fill in some of the gaps in the offering and meet specific customer needs.”
Wiemeyer added that SMAs' personalization is appealing to clients and Fidelity plans continued expansion in the area.
The fixed-income SMAs require a $350,000 minimum investment and invest in limited-duration investment-grade municipal bonds and investment-grade taxable and securitized bonds. They include the Breckinridge Limited Duration Municipal Strategy, the Fidelity Limited Duration Municipal Strategy and the Fidelity Limited Duration Bond Strategy.
The new equity SMAs require an investment minimum of $100,000 for wealth SMAs and $5,000 for digital SMAs. Digital SMAs are part of Fidelity’s managed portfolios offering, which is geared toward self-directed clients, as well as clients with lower net worth. The investments are run by Fidelity’s dedicated investment managers, but all of the client’s interactions with the platform remain digital.
The equity strategies aim to approximate pre-tax return and risk profiles of the indices they follow. They will also incorporate active tax management to improve after-tax returns. They include the Total Market Index, which will be based on the Fidelity U.S. Total Investable Market Index; the Low Volatility Index, based on the Fidelity U.S. Low Volatility Focus Index; and Environment Focus, based on the Fidelity U.S. Large Cap Index. The latter focuses on companies working to reduce their environmental footprint.
A study completed last fall by data analytics and advisory firm Escalent found the advisors it surveyed planned to increase their average SMA allocations by eight percentage points to 26% by 2025. Advisors who worked with high-net-worth clients also planned a similar increase, from 23% to 31%.
Survey participants cited low fees, a wide array of investment options and the ability to customize among the reasons they preferred SMAs over model portfolios. Likewise, research firm Cerulli Associates forecasts that by the end of 2024, assets managed under SMAs will reach $2.2 trillion. Cerulli estimates that assets managed in SMAs and unified managed accounts grew by 12% in 2023 compared to the year prior.
As of March, Fidelity managed $175 billion in custom SMAs, direct indexing, active equity and fixed-income strategies.
