Fidelity Takes the Leap: Revolutionizing ETFs with Three New Funds for Bonds and Real Estate

Fidelity Investments has made a bold move, launching its first ETF share classes on June 18, 2026, bringing exchange-traded versions of three established mutual fund strategies to the forefront. The three ETF share classes, namely the Fidelity Intermediate Municipal Income ETF (FIMU), the Fidelity Real Estate Income ETF (FREI), and the Fidelity Short-Term Bond ETF (FSTB), were created from existing mutual fund strategies, leveraging the same portfolio, track record, and investment management team. This strategic decision allows Fidelity to cater to both traditional and exchange-traded investors, offering them the flexibility to choose between mutual funds and ETFs.

One of the primary benefits of ETF share classes is their ability to provide investors with benefits that mutual funds cannot offer. By adding an ETF wrapper to a mutual fund, asset managers can allow both traditional and exchange-traded versions of the same strategy to coexist under one portfolio umbrella. This structure enables intraday trading, potential tax efficiency through in-kind creation and redemption mechanisms, and in many cases, lower expense ratios, according to InvestmentNews analysis. As a result, investors can now experience the advantages of ETFs on top of the established track record of Fidelity's mutual fund strategies.

The three new Fidelity products boast competitive expense ratios, with FIMU carrying an estimated net expense ratio of 0.30%, FREI charging 0.57%, and FSTB, the short-term bond strategy, will charge 0.20% on a net basis. This low-cost structure is a testament to Fidelity's commitment to providing investors with innovative and cost-effective solutions. The company's move into ETF share classes marks a significant shift in the industry landscape, allowing Fidelity to capitalize on the growing demand for ETFs among investors.

The introduction of ETF share classes also offers existing Fidelity mutual fund shareholders a unique opportunity to convert their holdings to the ETF share class on a recurring, non-taxable basis. This option allows investors to benefit from the advantages of ETFs without incurring additional taxes. Greg Friedman, head of ETFs at Fidelity, stated, 'This is an inflection point in the ETF industry, with exemptive relief providing the opportunity to offer additional product choice for investors.' This sentiment reflects the excitement and anticipation surrounding the introduction of ETF share classes.

The SEC's approval of Dimensional Fund Advisors' application in September 2025 paved the way for other asset managers to follow suit. This decision marked a significant milestone in the history of ETFs, allowing actively managed strategies to use the ETF share class structure. Following Dimensional's approval, more than 60 sponsors re-filed share class relief applications, according to a Brown Brothers Harriman analysis cited by InvestmentNews. The momentum generated by this approval has accelerated the adoption of ETF share classes among asset managers.

According to a 2024 ISS Market Intelligence survey, 60% of advisors stated that they would prefer to access a favored manager in ETF form, compared to just 15% who would opt for a mutual fund. A separate Brown Brothers Harriman global investor survey in March 2026 found that 86% of U.S. respondents stated that they would buy an ETF share class of a mutual fund if given the choice, according to InvestmentNews. These statistics demonstrate the growing demand for ETFs among investors and advisors alike.

Fidelity's entry into the ETF share class space marks a significant expansion of its exchange-traded lineup, which now stands at 84 ETFs and exchange-traded products with $172 billion in assets under management as of May 31, 2026. The company's data shows that 53% of advisors' portfolios included ETFs as of the fourth quarter of 2024, a 9% increase from the prior year, highlighting the growing integration of ETF structures into professional investment strategies. As Fidelity continues to innovate and expand its product offerings, it is likely to remain at the forefront of the ETF industry.

With its rich history and commitment to innovation, Fidelity has cemented its position as a leader in the financial services industry. The launch of its ETF share classes is a testament to its ability to adapt and respond to changing market trends and investor preferences. As the investment landscape continues to evolve, Fidelity remains a trusted partner for investors seeking cost-effective and innovative solutions.