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Fidelity Investments will impose a new $100 servicing charge for 59 ETFs issued by nine companies starting June 3, to meet the cost of listing these products on its platform amid growing competition that has pushed firms to cut expense ratios, Bloomberg reported.
The surcharge applies to firms that aren’t part of Fidelity’s maintenance arrangement – including Simplify Asset Management, AXS Investments, Sterling Capital, and Cambiar Investors.
The list, which represents less than 0.5% of mutual funds and ETFs on Fidelity’s platform, will be periodically updated and is subject to change before the effective date.
“Support fees help maintain the technology and service operations needed to ensure a secure and positive experience for investors,” Fidelity said in a statement.
“In effect, this is how they pay for zero commission trades,” Tom Graff, investment chief at financial planning firm Facet, told etf.com, adding that Fidelity is essentially saying it would prefer to funnel client money into larger ETF providers.
The new fee comes at a time when ETFs have become more popular than mutual funds, which saw net outflows of over $1T from Jan. 2021 to Dec. 2023. The trend has led to asset managers increasingly converting mutual funds to ETFs.
