Fidelity strengthens ETF portfolio focus with new suites

Fidelity Investments is sharpening its focus on wealth managers with new additions to its ETF model portfolio offering.

The firm introduced two new suites of all-ETF model portfolios on Thursday, leaning into the trend of advisors de-prioritizing investment management in favor of other activities to build their business or serve clients.

Fidelity's latest offerings, Fidelity Target Allocation ETF Model Portfolios and Fidelity Target Risk ETF Model Portfolios, are designed to cater to a range of risk profiles, from capital preservation to aggressive growth.

“ETFs continue to be an increasingly attractive option for advisors due to their cost and tax efficiencies,” said Amanda Robinson, vice president of portfolio solutions at Fidelity Institutional, said in a statement. “These new model portfolios offer advisors a streamlined way to execute an ETF strategy while also meeting the evolving needs of their clients.”

Fidelity launched its first model portfolio in 2018 and has since expanded its turnkey portfolio lineup by 120 percent.

The firm said Its newest target-risk and target-allocation ETF portfolios are available on multiple platforms, including Fidelity Managed Account Xchange Essentials, Envestnet’s RIA Marketplace, 55ip, and SMArtY.

Fidelity stated that the portfolios align with its open-architecture approach, incorporating both proprietary and third-party ETFs across domestic equity, international equity, and fixed income strategies.

While the Target Risk ETF models respond to the growing case for diversification beyond traditional investments, those portfolios use liquid alternative ETFs. That diverges from a host of surveys in recent months suggesting individual investors and advisors are looking to go afield with private market assets.

In its own portfolio construction insights reporting, Fidelity found that ETF adoption among advisors has continued to rise. As of the fourth quarter of 2024, 53 percent of advisors’ portfolios included ETFs, up from 44 percent in 2023. By asset class, it said 67 percent of incoming portfolios used ETFs to allocate to US equities, while 47 percent leveraged ETFs for international exposure and 57 percent used ETFs to get their fix of fixed income.

The firm also noted that investments in unique ETFs within Fidelity custom model portfolios more than doubled between 2022 and 2024. A recent report by Morningstar affirmed the appeal of custom portfolios, noting how custom model portfolio assets have blownpast $125 billion as of September 30, almost 50 percent higher than where the market was on June 30, 2023.

"Customization enables advisors to adjust third-party model portfolios to align with both their personal preferences and clients' needs," Morningstar said.