Fidelity’s Growing Lineup, Available to Financial Advisors, Includes
a New Suite of Equity Models
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:
-
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.
FIAM does not have investment discretion and does not place trade orders
for any of your clients’ accounts. Information and other marketing
materials provided to you by FIAM concerning the Models may not be
indicative of your client’s actual experience from investing in one or
more of the investment products included in the Models. The Models’
allocations and data are subject to change.
Past performance is no guarantee of future results. An investment may be
risky and may not be suitable for an investor’s goals, objectives and
risk tolerance. Investors should be aware that an investment’s value may
be volatile and any investment involves the risk that you may lose
money. Investment performance of the Models depends on the performance
of the underlying investment options and on the proportion of the assets
invested in each underlying investment option over time. The performance
of the underlying investment options depends, in turn, on their
investments. The performance of these investments will vary day to day
in response to many factors. Asset allocation strategies are subject to
the volatility of the financial markets, including that of equity and
fixed income investments in the U.S. and abroad, and may be subject to
risks associated with investing in high-yield, small cap,
commodity-linked, and foreign securities.
Stock markets are volatile and can decline significantly in response to
adverse issuer, political, regulatory, market, or economic developments.
In general the bond market is volatile, and fixed income securities
carry interest rate risk. (As interest rates rise, bond prices usually
fall, and vice versa. This effect is usually more pronounced for
longer-term securities.) Fixed income securities also carry inflation,
credit, and default risks for both issuers and counterparties. Because
of its narrow focus, sector investing tends to be more volatile than
investments that diversify across many sectors and companies. Each
sector investment is also subject to the additional risks associated
with its particular industry.
There is no guarantee that a factor-based investing strategy will
enhance performance or reduce risk. Before investing, make sure you
understand how a factor investment strategy may differ from a more
traditional index-based or actively managed approach. Depending on
market conditions, factor-based investments may underperform compared to
investments that seek to track a market-capitalization-weighted index or
investments that employ full active management.
Capital Markets Strategy insights, and portfolio construction
capabilities including, Portfolio Quick Check and Portfolio Construction
Guidance, are provided to advisors by Fidelity Investments Institutional
Services Company, Inc., a registered broker/dealer that is affiliated
with FIAM LLC.
Mutual funds are offered by Fidelity Investments Institutional Services
Company, Inc. and Fidelity Brokerage Services LLC, Member NYSE/SIPC.
“Fidelity Investments” and/or “Fidelity” refers collectively to FMR LLC,
a U.S. company, and its subsidiaries, including but not limited to
Fidelity Management & Research Company (FMR Co.) and FIAM.
Fidelity Clearing & Custody Solutions® provides clearing,
custody, or other brokerage services through National Financial Services
LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC.
The registered trademarks and service marks appearing herein are the
property of FMR LLC.
Before investing, consider the funds’ investment objectives, risks,
charges, and expenses. Contact your investment professional or visit
institutional.fidelity.com for a prospectus or, if available, a summary
prospectus containing this information. Read it carefully.
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© 2019 FMR LLC. All rights reserved.
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.
Contacts
Corporate Communications
(617) 563-5800
[email protected]
Caroline
St. Angelo
(201) 915-7547
[email protected]
