Fidelity Investments is the latest asset manager to ramp up its model-portfolio business as demand for off-the-shelf and customized investment strategies across asset classes continues to pick up.
The company is launching Target Risk ETF Model Portfolios and the Target Allocation ETF Model Portfolios, two strategies that offer investors exposure to equities, bonds or alternatives by tracking a blend of active and passive exchange-traded funds, according to a Thursday press release. Both are open-architecture, which allows the portfolios to hold products apart from their own.
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Fidelity is competing against the likes of BlackRock, State Street Global Advisors and Goldman Sachs Asset Management for a bigger slice of what is forecast to become a more than $10 trillion
Amanda Robinson, vice president of portfolio solutions at Fidelity Institutional, said the company has an edge over other Wall Street issuers because of its proprietary research.
Assets in model portfolios — which bundle together ETFs and mutual funds into
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The boom has been fueled by the growth of ETFs, which comprised 52% of all model-portfolio assets with the remainder in mutual funds, according to data from Broadridge, which cites diversification, high liquidity and cost-effectiveness as reasons for the increasing take-up. Similarly, investments in ETFs within Fidelity's custom model portfolios have reached 51% at the end of last year, more than double from 2022, the company said.
Fidelity declined to share the total assets of its model portfolio business, which includes a lineup of over 121 institutional turnkey strategies, those that come with pre-built allocations without the need for significant customization. The asset manager launched its turnkey offering in 2018.
