Almost a year after it first began exploring the Canadian exchange-traded funds market, Canada’s fourth-largest mutual fund firm, Fidelity Investments Canada ULC, is set to launch its first set of ETFs this fall.
Fidelity has filed preliminary documents with regulators to launch six new smart beta dividend-yield strategies for Canadian ETF investors: Fidelity Canadian High Dividend Index ETF (FCCD), Fidelity U.S. Dividend for Rising Rates Index ETF (FCRR), Fidelity U.S. Dividend for Rising Rates Currency Neutral Index ETF (FCRH), Fidelity U.S. High Dividend Index ETF (FCUD), Fidelity U.S. High Dividend Currency Neutral Index ETF (FCUH), and Fidelity International High Dividend Index ETF (FCID).
Smart beta funds, also known as factor-based or quantitative funds, follow an index but have portfolio managers who can change the mandates or investment strategies when needed.
Management fees for the funds range from 0.35 per cent to 0.45 per cent.
Fidelity Investments will manage the funds and has retained Boston-based Geode Capital Management, LLC to act as sub-advisor to the Fidelity ETFs. It has also retained State Street Global Advisors Ltd. to act as sub-advisor solely in connection with the currency-hedging activities of FCRH and FCUH.
Fidelity Investments, which manages more than $138-billion in mutual fund and institutional assets in Canada, is one of the last major mutual fund companies to enter the ETF space in the country.
Last August, in a LinkedIn job posting, the company said it was looking to hire an experienced vice-president who can create and implement an ETF strategy. The firm later announced in January it had hired Raymond James fund expert Andrew Clee.
Mr. Clee joined Fidelity's Canadian operations as vice-president of ETFs on Jan. 2. Prior to joining Fidelity, Mr. Clee was a mutual fund/ETF specialist and portfolio manager for Raymond James Ltd. in Canada.
In the United States, Fidelity has been operating in the ETF market for more than a decade with a family of 21 funds. Its U.S. fund family includes bond, sector and factor-based ETFs and is sold through financial advisers, robo-advisers and directly to consumers.
In Canada, Fidelity entered the mutual-fund market in 1987. Today, it’s the fourth-largest player in the country with 179 mutual funds, which are sold almost exclusively through investment advisers.
Clare O’Hara