Fidelity Investments is closing five of its ETFs as the company continues to simplify its product lineup in the face of shifting investor demand.
Fidelity Digital Health ETF (BATS:FDHT), Fidelity Sustainable Core Plus Bond ETF (NYSE:FSBD), Fidelity Sustainable Low Duration Bond ETF (NYSE:FSLD), Fidelity Sustainable U.S. Equity ETF (NYSE:FSST) and Fidelity Women’s Leadership ETF (NYSE:FDWM) are among the funds being closed.
• FDHT is under selling pressure. Get the latest updates here.
The ETFs will halt trading on Nov. 13.
Shareholders may remain able to sell shares through the close of trading on that date. After the market closes, the funds will no longer receive creation orders, and trading in the shares will end.
The liquidation will be done by approximately Nov. 20, with the ETFs’ portfolios transferred into cash or other liquid holdings. During the period between the trading halt and liquidation, shareholders will not be able to trade in the ETFs, and little or no secondary market activity may occur.
Fidelity stated the move is a routine review of investment offerings to make sure the company has a differentiated set of strategies that meet evolving investor needs.
The company presently has over 70 ETFs and ETPs, with $144 billion of ETF assets under management and serving as administrator of $16.4 trillion in total assets under administration, including $6.4 trillion in discretionary assets as of June 30.
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The decision is part of a larger trend of rationalization in ETFs, as asset managers zero in on products with more demand and larger size. Specialty ETFs, such as those that target digital health or women in leadership, may have a hard time gathering enough assets to support continued existence, especially in a crowded ETF marketplace where investors increasingly lean toward low-cost, wide-moat funds.
For investors, the liquidation emphasizes the need to know not only the thematic popularity of an ETF but also how liquid and large it is. Though Fidelity is still a significant player in the ETF marketplace, the shake-up highlights how even strongly branded funds can be retired if they don’t hit strategic or financial milestones.
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