- Investment managers and investors may see changes to their cost structures.
- The purpose of this charge is to defray Fidelity’s expenses related to service operations.
A number of exchange-traded fund (ETF) managers have just signed new revenue-sharing agreements with Fidelity Investments, marking a major step forward for the ETF industry. This move is part of Fidelity’s aim to strengthen its position in this competitive sector and comes at a time when investor interest in ETFs is on the rise.
Investment managers and investors may see changes to their cost structures as a result of the agreements’ focus on improving Fidelity’s brokerage platform.
Aims to Defray Expenses
Moreover, the crypto sector is abuzz over Fidelity’s recent efforts to forge revenue-sharing arrangements with ETF managers. In reaction to Fidelity’s proposed service charge, nine ETF providers came up with these agreements.
Furthermore, investors may be hit with a fee of up to $100, or 5% of their purchasing position, if managers choose not to participate in the revenue-sharing agreement. Also, the purpose of this charge is to defray Fidelity’s expenses related to service operations and technological updates.
The scenario has been characterized as a “big undertaking” by David Young, CEO of Regents Park Funds, who recently made the statement that the necessity to balance platform maintenance expenses drove Fidelity’s decision to explore revenue-sharing. The avoidance of the exorbitant service fees was the primary motivation for Young’s business to join the arrangement.
Notably, the exchange-traded fund (ETF) industry has expanded fast, requiring new strategies for platforms like Fidelity to handle the flood of ETFs. Revenue sharing is nothing new in the thriving ETF industry, according to experts. This is in contrast to the more established field of wealth management.
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