It’s official: Fidelity is launching a major new business line under a new brand, has brought in a ringer to lead it — and put it all in a city far from Boston. SelectCo appears to be an attempt on Fidelity’s part to catch a third wave of niche interest in exchange-traded funds after having missed the first two. It is to be headed by ex-State Street Global Advisors luminary Anthony Rochte, who brings an in-depth knowledge of ETF products. State Street is the second-biggest ETF provider, with 40 ETFs and nearly $60 billion in those funds. See: Coming from behind, Vanguard is gobbling up ETF market share.
Though Bloomberg has reported on the company’s efforts, this is the first time that Fidelity has acknowledged the new division and confirmed its name.
Weisbruch speculates that the different brand name may be an attempt to avoid having difficult conversations with advisors who are already purchasing Fidelity mutual funds at higher fees. But that strategy may backfire, says Weisbruch, who points out that Scottrade’s FocusShares, the rough equivalent of SelectCo, failed, perhaps because people never quite understood that they were dealing with Scottrade.
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