Fidelity Adds ETF Model Portfolios Aimed at Wealth SegmentFidelity Adds ETF Model Portfolios Aimed at Wealth Segment

Fidelity Investments has expanded its model portfolio lineup for wealth management firms with the launch of two all-ETF model portfolio suites.

The Fidelity Target Allocation ETF Model Portfolios and the Fidelity Target Risk ETF Model Portfolios are “designed for various risk profiles with goals ranging from capital preservation to aggressive growth.” They feature a mix of active and passive proprietary and third-party ETFs with a mix of assets, including domestic equity, international equity and fixed income. The target risk portfolios will also include liquid alternative ETFs.

The target allocation set features nine target asset mixes (with equity/fixed income mixes ranging from 100/0 to 10/90) and will have an average annual net expense ratio between 0.21% and 0.28%. The target risk portfolios include five risk profiles (ranging from conservative to aggressive) and have expense ratios between 0.32% and 0.35%.

The model portfolios will be available through Fidelity and some third-party platforms, including Envestnet’s RIA Marketplace, 55ip and SMArtY.

“These new model portfolios offer advisors a streamlined way to execute an ETF strategy while also meeting the evolving needs of their clients,” Amanda Robinson, vice president of portfolio solutions at Fidelity Institutional, said in a statement. “Our goal is to help advisors better scale their practices so they can prioritize critical activities such as wealth planning, business development, and time with clients.”

The new model portfolios add to a product mix that includes eight separately managed accounts (SMAs) across domestic equity, sector, and international equity strategies. Fidelity also offers a custom model portfolio service to advisors.

A recent report from market research firm Cerulli Associates found that a majority of financial advisors expect to 
prioritize the use of model portfolios over funds of funds going forward because of the higher level of customization model portfolios offer. According to the report, 61% of surveyed advisors expect to give preference to model portfolios over funds of funds.

In rolling out the new set of portfolios, Fidelity also pointed to insights gleaned from its regular analysis of advisor portfolios. For example, its most recent analysis of 3,733 portfolio reviews and portfolio quick checks conducted in the fourth quarter found that 67% of portfolios used ETFs for U.S. equity exposure (while 79% also included mutual funds), 47% used ETFs for international equities and 57% used ETFs for fixed-income.