Fidelity, Vanguard expand their active ETF shelves

Fidelity and Vanguard are leaning into the continuing boom in active ETFs with new launches to their respective ETF menus.

On Thursday, Fidelity unveiled five actively managed equity ETFs, broadening its Enhanced and Fundamental ETF suites.

The new ETFs – Fidelity Enhanced US All-Cap Equity ETF, Fidelity Enhanced Emerging Markets ETF, Fidelity Fundamental Developed International ETF, Fidelity Fundamental Global ex-U.S. ETF, and Fidelity Fundamental Emerging Markets ETF – offer varying levels of exposure to domestic, international, and emerging markets.

These products, available on the NYSE and Cboe, were launched commission-free for individual investors and financial advisors through Fidelity's online brokerage platforms.

“The expansion of Fidelity’s core active equity suites speaks to our ability to combine the best of our fundamental and quantitative teams to deliver differentiated actively managed investment products,” Greg Friedman, head of ETF management and strategy at Fidelity Investments, said in a statement Thursday.

Fidelity also announced a fee reduction for its active high yield ETF, which has been renamed the Fidelity Enhanced High Yield ETF. The reduced expense ratio, from 0.45 percent to 0.35 percent, reflects Fidelity's focus on providing value to investors through competitive pricing, according to the company.

Meanwhile, Vanguard launched two active municipal bond ETFs, the Vanguard Core Tax-Exempt Bond ETF and Vanguard Short Duration Tax-Exempt Bond ETF. Managed by Vanguard’s Fixed Income Group, these funds aim to offer tax-exempt income with expense ratios of 0.12 percent. The Core ETF provides broad exposure to high-quality municipal bonds, while the Short Duration ETF focuses on short-term bonds with lower interest rate sensitivity.

“These new ETFs combine our top-tier active fixed income capabilities with our expert municipal bond team,” Sara Devereux, global head of Vanguard Fixed Income Group, said Thursday. “We envision these ETFs playing an integral role in investors’ portfolios.”

Vanguard's ETF launches, which it first telegraphed in August, builds on the case for including municipal bond allocations in investors' portfolios. It also puts Vanguard firmly in league with the growing number of asset managers who are rebundling select mutual fund strategies into ETF packages.

Both Fidelity and Vanguard's launches reflect a surge in active ETF interest among advisors. Fidelity’s portfolio analysis found that 29 percent of advisors now allocate to active ETFs, a 123 percent increase since 2022, driven by their tax efficiency, low costs, and intraday liquidity.