Fidelity’s Growing Lineup, Available to Financial Advisors, Includes a New Suite of Equity Models
June 13, 2019 — BOSTON–(BUSINESS WIRE)–Fidelity Investments®, one of the largest and most diversified global financial services firms with $7.6 trillion in client assets1, today launched new business cycle model portfolios and factor ETF model portfolios. These models broaden Fidelity Model Portfolios’ existing lineup with an expanded universe of investment opportunities. Fidelity provides a range of model options – including ETFs and mutual funds, active and passive management, strategic and dynamic management approaches, Fidelity funds and offerings from leading fund providers – all focused on helping advisors meet their clients’ needs.
The business cycle model portfolios incorporate a dynamic investment approach based on shifts in the business cycle, designed to enhance risk-adjusted returns. The factor ETF model portfolios are designed to help achieve specific outcomes in the U.S. equity allocation of a portfolio. They expand upon Fidelity’s existing offering, which includes models designed for core diversification as well as distribution income.
“Model portfolios allow advisors to tap into the investment management expertise of asset managers while also offering advisors the ability to customize solutions that help address their clients’ specific needs,” said Matt Goulet, senior vice president, Fidelity Institutional Asset Management. “These new model portfolios leveraged the feedback we heard from advisors who were looking to incorporate specific strategies to complement the allocations in their clients’ portfolios.”
The new model portfolios are a continuation of Fidelity’s commitment to offering advisors choice. The business cycle model portfolios are based on the framework of Fidelity’s Asset Allocation Research Team (AART), which conducts economic, fundamental and quantitative research to produce asset allocation recommendations for Fidelity’s portfolio managers and investment teams. These open architecture models can utilize Fidelity mutual funds and ETFs in addition to ETFs from some of the leading providers in the industry; they currently use BlackRock iShares ETFs. The offering includes:
Fidelity Multi-Asset Business Cycle Model Portfolio-
designed to provide enhanced risk-adjusted returns by overweighting asset classes and sectors that tend to outperform during a given business cycle phase, while underweighting those that tend to underperform. This expands our lineup of core diversification model portfolios, which can help advisors create diversified portfolios aligned to a client’s level of risk.
Fidelity Sector Equity Business Cycle Model Portfolio-
designed to provide enhanced risk-adjusted returns by overweighting sectors that tend to outperform during a given business cycle phase, while underweighting those that tend to underperform. This model, together with the new factor ETF models, represents a new suite of equity models from Fidelity.
Fidelity research found that 88% of advisors use ETFs in their client portfolios.2 The factor ETF model portfolios can be used to complement existing U.S. equity positions or as standalone U.S. equity positions within a diversified portfolio. They provide exposure to six Fidelity factor ETFs, and these ETFs and the models have been constructed by Fidelity’s quantitative research team. The offering includes:
These new model portfolios leveraged the feedback we heard from advisors who were looking to incorporate specific strategies to complement the allocations in their clients’ portfolios...
Fidelity U.S. Equity Factor ETF Model Portfolio-
designed to provide enhanced risk-adjusted returns for clients looking for capital appreciation.
Fidelity U.S. Equity Defensive Factor ETF Model Portfolio-
designed to help reduce risk and lower volatility, which may help clients who are more sensitive to market downturns.
Fidelity U.S. Equity Income Factor ETF Model Portfolio-
designed to provide income generation and maximize realized dividend yield, which may benefit clients in or approaching retirement.
The models enhance Fidelity’s current lineup of portfolio capabilities, which include insights from the Capital Markets Strategy team, a robust thought leadership program on portfolio construction, portfolio evaluations with the Portfolio Quick Check diagnostic tool and consultation from the Portfolio Construction Guidance team.
Fidelity Model Portfolios are available to advisors at broker-dealers, registered investment advisors, banks and insurance companies. More than 100 advisory firms have access to Fidelity Model Portfolios through turnkey platforms. Advisors can also receive model updates directly from Fidelity. For more information, please visit go.fidelity.com/models.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.6 trillion, including managed assets of $2.7 trillion as of April 30, 2019, we focus on meeting the unique needs of a diverse set of customers: helping more than 30 million people invest their own life savings, 22,000 businesses manage employee benefit programs, as well as providing more than 13,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for more than 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
This document does not make an offer or solicitation to buy or sell any securities or services, and is not investment advice. FIAM does not provide legal or tax advice and we encourage you to consult your own lawyer, accountant or other advisor before making an investment.
Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.
The Fidelity Target Allocation Models, Fidelity Business Cycle Models, Fidelity U.S. Equity Factor Models, and Fidelity Income Models (collectively, the “Fidelity Model Portfolios” or the “Models”) are made available to financial intermediaries on a non-discretionary basis by FIAM LLC, a registered investment adviser, or by Fidelity Investments Institutional Services Company, Inc. (“FIISC”), a registered broker-dealer, (collectively “FIAM”).
The information presented herein is for discussion and illustrative purposes only and is not investment, legal or tax advice, nor an offer or a solicitation to buy or sell any securities or services.
FIAM is not acting as a fiduciary or in any advisory capacity in providing this information. The information is designed to be utilized by you solely as a resource, along with other potential sources, in providing advisory services to your clients. You are solely responsible for determining whether the Models, the investment products included in the Models, and the share class of those products are appropriate and suitable for you to base a recommendation or provide advice to any end investor about the potential use of the Models.
With the exception of the Fidelity Target Allocation Models, which consist solely of Fidelity mutual funds, Models may consist of Fidelity mutual funds, Fidelity ETFs, third-party ETFs, and iShares ETFs sponsored by BlackRock. These investment products that comprise the models are available only in the share class designated by FIAM when made available through the Models. FIAM does not seek to offer investment products or share classes through the Models that are necessarily the least expensive. In some cases, the investment products in the Models may have a lower cost share class available on a stand-alone basis for purchase outside of the Models, or that may be available to other types of investors. Use of the Models will result in the payment of fees to the Fidelity funds and Fidelity ETFs in the Models as provided for in the prospectus to each such product. The fees received from investment in the funds and ETFs will be shared by various affiliates, including FIAM, involved in distributing and advising the Models and the Fidelity funds and Fidelity ETFs in the Models.
For certain accounts custodied on Fidelity’s brokerage platform that elect to invest in Fidelity Models that include iShares ETFs, Fidelity receives compensation from the iShares ETF sponsor and/or its affiliates in connection with an exclusive, long-term marketing program that includes promotion of iShares ETFs. Additional information about the sources, amounts, and terms of compensation is described in the ETF’s prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.
1 As of April 30, 2019
2 Fidelity conducted an online survey of 437 financial advisors, which were representative of the BD and RIA marketplaces. Fidelity was not identified as the survey sponsor. This research was conducted between November 29, 2018 and December 5, 2018.