Fidelity Investments is increasing its reliance on BlackRock's iShares to compete in the ETF business.
The number of exchange-traded funds from BlackRock's iShares that can be traded commission-free by Fidelity clients will more than double to 65, the two companies announced Wednesday. ETFs from iShares, the industry's largest provider, will be used within Fidelity's managed accounts later this year, and BlackRock will help Fidelity develop ETFs tied to sector strategies. In exchange, BlackRock will reach more U.S. retail investors directly.
BlackRock and Fidelity agreed to offer 25 iShares funds commission-free to Fidelity's clients in February 2010, and the lineup was expanded to 30 a year later. The new lineup will offer ETFs that invest in international and domestic stocks, fixed income, commodities and specialized equities.
Fidelity filed a request with the Securities and Exchange Commission in December to open a wide range of actively managed ETFs, starting with a bond fund.
The deal helps BlackRock vie for individual investors with such firms as Charles Schwab, which said last month it was expanding commission-free trading in ETFs by partnering with State Street and Invesco.
“Growth in the ETF marketplace has continued strongly and is going to continue to grow over the next decade,” Kathleen Murphy, president of personal investing at Fidelity, said in a telephone interview. “We want to make sure we provide a compelling offer to our investors.”
In the 12 months ended Jan. 31, ETF assets in the U.S. increased 24% to $1.4 trillion, compared with about 3% for mutual funds, which hold $13.4 trillion, according to data from the Investment Company Institute.
