By Suzanne McGee
(Reuters) – Fidelity Investments said on Thursday that it has launched two all-ETF model portfolios for use by wealth management firms looking for help winnowing through the rapidly growing array of funds to construct client portfolios.
The new models will offer both active and passive exchange-traded funds employing an array of investment strategies, and will include not only Fidelity ETFs but those of other providers.
The Fidelity Target Allocation ETF Model Portfolios will offer a core, multi-asset class model, while the Fidelity Target Risk ETF Model Portfolios will include liquid alternative investments and function as a complementary addition to that kind of core model.
These model portfolios have largely displaced products like fund of funds in recent years, and an estimated 85% of all models now offer open architecture, said Matt Apakarian, an analyst at Cerulli Research who tracks the space.
“Asset managers want to build something that attracts advisors to their firm, its platform and its products,” Apakarian said.
At the same time, Apakarian added, ETF issuers are more aware of the need, when building new products, to make them appealing to those constructing those models. As of the end of 2024, the U.S. market alone featured nearly 4,000 separate ETFs.
Fidelity said that the number of ETFs being selected for use in its customizable model portfolios more than doubled in the two years ended in December 2024.
According to a survey of 200 financial planners managing a total of more than $5 billion published by State Street Global Advisors in December, those wealth managers reported investing an average of 39% of those assets via models, up from 32% three years ago.
Customizeable model portfolios have been growing even more rapidly, according to a report from Morningstar published this month that estimated assets invested in these products soared 50% in a 15-month period ended September 30, 2024 to reach $125 billion.
(Reporting by Suzanne McGee; Editing by Will Dunham)
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