| NEW YORK, April 24
NEW YORK, April 24 Fidelity Investments and
BlackRock Inc, already partners in the exchange-traded
funds market, are teaming up once again to launch a new
ETF-heavy managed account aimed at providing income for
investors preparing for retirement.
The new BlackRock Diversified Income Portfolio, which will
be roughly 70 percent invested in ETFs, will be available
beginning May 1 exclusively to the roughly 14 million retail
customers who have Fidelity brokerage accounts, the company said
Under the arrangement with BlackRock, the world's largest
money manager and a leader in the $2.4 trillion global ETF
industry, Fidelity, the second largest U.S. mutual fund firm,
will serve as the investment adviser to the managed account.
The new offering propels Fidelity into the fast-growing ETF
managed account universe, which totaled around $96 billion in
assets at the end of December, according to a tally of managed
portfolio strategies tracked by research firm Morningstar.
Morningstar defines ETF-managed portfolios as those with at
least 50 percent of its assets invested ETFs.
Fidelity's new managed account also expands the role of ETFs
as investments used in preparing individuals for retirement.
"We have millions of customers in the pre-retiree category
concerned about retirement income and making that money last
through retirement," said Kathy Murphy, president of Fidelity
Personal Investing, in an interview. "We think it will be very
helpful to that specific segment of the market."
A managed account is a fee-based investment. Annual advisory
fees on the new Fidelity managed account will be between 0.55
percent and 1.1 percent of total assets invested, depending on
the size of the investment.
The bulk of the new portfolio will be invested in iShares
ETFs, with the rest in mutual funds, Master Limited Partnerships
and other investment vehicles. It will have a "go-anywhere"
mandate allowing the manager to stuff it with a variety of
assets from around the world.
Fidelity currently has about $158 billion in total assets
under management in its managed accounts business, largely in
mutual funds and other investments.
BlackRock will serve as the portfolio strategist for the new
managed account, overseeing asset allocation, with Fidelity as
the investment adviser for its customers' individual accounts.
It is the latest ETF collaboration from the two firms, which
first partnered in 2010 when Fidelity began offering BlackRock's
iShares ETFs commission-free on its platform, and have been
expanding their ETF relationship in recent years.
Fidelity last year increased the number of BlackRock iShares
ETFs offered on its platform to 65 from 30, and introduced its
first full slate of sector ETFs in October with BlackRock as its
The partnership allows Fidelity to further expand into the
$1.7 trillion U.S. ETF market and gives BlackRock access to
Fidelity's vast distribution platform.
Since Fidelity increased its iShares offering last year,
investments in the iShares ETFs on its platform increased 86
percent from the year prior, with the number of Fidelity
accounts holding iShares ETFs up 16 percent, the company said.
(Reporting by Ashley Lau in New York; Editing by Linda Stern
and Lisa Shumaker)