Fidelity's next trick: a muni bond fund-to-ETF flip

Fidelity's next trick: a muni bond fund-to-ETF flip
The firm's plans to convert two of its municipal bond mutual funds follows similar moves by rivals including BlackRock.
OCT 03, 2024
By  Bloomberg

Fidelity Investments is looking to convert two of its municipal-bond mutual funds into exchange-traded funds, a move that underscores the popularity of the $10 trillion US arena. 

The two funds impacted are the $170 million Fidelity Municipal Bond Index Fund and the Fidelity Municipal Core Plus Bond Fund, which has less than $70 million in assets. Both are expected to be converted next year, according to two separate regulatory filings. 

“These conversions can deliver new opportunities and value for our existing shareholders, while also expanding our solutions to help meet demand for access to innovative strategies in an ETF wrapper,” said Greg Friedman, Fidelity’s head of ETF management and strategy, in an emailed statement.

The Boston-based asset manager isn’t new to this trend. In June 2023, Fidelity announced that it would turn six of its mutual funds into ETFs, after revealing plans of a first wave of conversions the prior year. 

Such conversions became popular a few years ago after Dimensional Fund Advisors, JPMorgan and Neuberger Berman flipped their funds. Now, it’s starting to become more common in the muni market as well. BlackRock Inc. is planning to convert its BlackRock High Yield Municipal Fund into an ETF, according to a recent filing.

With investors flocking to low-cost products, muni ETFs have grown to a $135 billion arena. There are now more than 100 such ETFs tracked by Bloomberg. 

Still, the pace of inflows into muni ETFs has slowed. The funds have raked in more than $10 billion so far in 2024. That’s compared to about $15 billion in 2023 and a peak of $29 billion in 2022, according to Bloomberg Intelligence data. 

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.