Fidelity Investments launched its first ETF share classes on June 18, 2026, adding exchange-traded versions of three established fixed-income strategies to its lineup: the Fidelity Intermediate Municipal Income ETF (FIMU), Fidelity Real Estate Income ETF (FREI), and Fidelity Short-Term Bond ETF (FSTB). Each share class was added to an existing mutual fund strategy, maintaining the same portfolio, track record, and investment management team while offering new trading flexibility and potential tax benefits to investors.
The launch marks a significant milestone for one of the country’s largest asset managers and signals the normalization of a structure that, until recently, was available to only one firm. “We are at an inflection point in the ETF industry, with exemptive relief providing the opportunity to offer additional product choice for investors,” said Greg Friedman, head of ETFs at Fidelity Investments, in the company’s announcement on June 15, 2026.
ETF share classes combine features of both mutual funds and exchange-traded funds. Unlike traditional mutual funds, which settle at net asset value (NAV) after market close, the ETF version trades intraday on an exchange at market prices. The structure also uses the in-kind creation and redemption mechanism typical of ETFs, which can reduce or eliminate capital gains distributions and improve tax efficiency. The three new products carry competitive expense ratios: FIMU at 0.30% net, FREI at 0.57% net, and FSTB at 0.20% net.
Clients who currently hold shares of Fidelity’s existing mutual funds on the company’s platform have the option to convert their holdings to the ETF share class on a recurring, non-taxable basis. This conversion feature is a key advantage of the dual-class structure, allowing existing investors to access the tax and trading benefits without triggering taxable events.
How SEC Relief Opened the Door
For decades, Vanguard was the only firm permitted to operate ETF share classes within mutual funds, protected by a patent that expired in May 2023. Following the patent expiration, nearly 80 fund managers filed petitions with the Securities and Exchange Commission (SEC) for exemptive relief to add ETF share classes of their own. The SEC’s September 2025 approval of Dimensional Fund Advisors’ application—the first such approval for an actively managed strategy—effectively became the starting signal for other asset managers to pursue their own exemptive relief.
More than 60 sponsors re-filed share class relief applications after the SEC indicated approval for Dimensional, according to a November 2025 analysis by Brown Brothers Harriman. The managers who filed represent more than half of the active mutual fund market, approximately $8.5 trillion in assets as of August 2025, per ISS Market Intelligence data cited in industry reports. Fidelity’s entry into the space underscores the momentum behind the structure as an inflection point in how the asset management industry serves investors.
The shift reflects strong investor preference for the dual-class approach. According to a 2024 survey by ISS Market Intelligence, 60% of advisors said they would prefer to access a favored manager in ETF form, versus 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 said they would buy an ETF share class of a mutual fund if given the choice. Fidelity cited internal data showing that 53% of advisors’ portfolios included ETFs as of the fourth quarter of 2024, up from 44% the prior year.
With the three new ETF share class launches, Fidelity’s exchange-traded lineup expanded to include 84 ETFs and exchange-traded products with $172 billion in assets under management, the firm said. The three funds are managed by experienced teams: the Intermediate Municipal Income fund is managed by co-portfolio managers Cormac Cullen, Michael Maka, and Elizah McLaughlin with a combined 26 years of experience; the Real Estate Income strategy is run by Bill Maclay, a 27-year veteran; and the Short-Term Bond ETF is managed by co-portfolio managers Dave DeBiase, Robert Galusza, and John Mistovich with a combined 89 years of experience.
Sources
- Fidelity Newsroom — announcement of first ETF share classes on June 15, 2026, with fund details, expense ratios, and conversion options
- InvestmentNews — context on ETF share class structure, SEC exemptive relief timeline, Dimensional’s first approval, and investor preference surveys
- SEC and regulatory sources — exemptive relief approval process and patent expiration in May 2023
