Fidelity doubles down on free ETFs

Fidelity Investments is following in the footsteps of its largest brokerage-firm competitors by expanding the number of commission-free exchange-traded funds on its platform. Financial advisers now can trade 65 iShares ETFs without paying a commission on the Fidelity platform, up from 30, the company said Wednesday. “It really positions the RIAs that work with us extremely competitively,” said Mike Durbin, president of Fidelity’s custody unit for registered investment advisers. The expanded lineup adds the popular “core” iShares ETFs, which were launched last fall to compete with low-cost offerings from Charles Schwab & Co. Inc. and The Vanguard Group Inc., as well as a broader range of fixed-income and commodities ETFs. “The new additions were no doubt driven by both investor and adviser interest in and demand for such,” said Jim Lowell, editor of the Fidelity Investor newsletter. The expansion follows similar moves by TD Ameritrade Inc. and Schwab. TD Ameritrade has offered commission-free trading on more than 100 ETFs since 2010. Schwab expanded its platform of commission-free ETFs to more than 100 last month. Fidelity is blazing its own path, Mr. Durbin said. While TD and Schwab offer commission-free ETFs from a range of providers, Fidelity’s deal is with BlackRock Inc.’s iShares alone. “The 65 ETFs provide tremendous depth and breadth,” Mr. Durbin said. “They’re very cost-effective, but also liquid. I think that resonates more than the number of ETFs offered.” Fidelity also will be taking its relationship with iShares a step further by launching managed ETF portfolios using the iShares products. Managed portfolios at Fidelity are primarily used by retail investors, but Mr. Durbin is excited about the possibility of attracting more advisers with the ETF-focused products. “The environment is ripe for that,” he said. Third-party money management is a growing trend in the RIA business as advisers start to think harder about how best to spend their time, Mr. Durbin said. Some may find that it is better to focus on prospecting or financial planning than day-to-day money management, Mr. Durbin said. Advisers who are turning to third-party money managers are increasingly doing so with those that focus on ETFs. Assets in model ETF portfolios that Morningstar Inc. tracks have grown to more than $57 billion, up 65% since September 2011, when the fund research firm began tracking them specifically.