Fidelity Investments launched its first ETF share classes on June 18, 2026, adding exchange-traded fund versions of three established mutual fund strategies: the Fidelity Intermediate Municipal Income ETF (FIMU), Fidelity Real Estate Income ETF (FREI), and Fidelity Short-Term Bond ETF (FSTB). The move marks a significant step for one of the country’s largest asset managers and signals the broader normalization of a structure that, until recently, only one firm was authorized to use.
Each ETF share class is added to an existing mutual fund strategy, sharing the same portfolio, track record, and investment management team. By adding an ETF wrapper, Fidelity offers investors intraday trading, potential tax efficiency through in-kind creation and redemption, and—in many cases—lower expense ratios than the mutual fund versions.
FIMU carries an estimated net expense ratio of 0.30% and is managed by co-portfolio managers Cormac Cullen, Michael Maka, and Elizah McLaughlin, who have a combined 26 years of experience managing municipal income strategies. FREI comes in at 0.57% and is managed by Bill Maclay, a 27-year veteran of the real estate sector. FSTB—the short-term bond strategy—will charge 0.20% on a net basis and is managed by co-portfolio managers Dave DeBiase, Robert Galusza, and John Mistovich, who bring a combined 89 years of experience.
“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. Fidelity said 53% of advisors’ portfolios included ETFs as of the fourth quarter of 2024, up from 44% the prior year. With these launches, Fidelity’s exchange-traded lineup consists of 84 ETFs and exchange-traded products with $172 billion in assets under management.
Clients who currently hold shares of the existing Fidelity mutual funds on the company’s platform will have the option to convert their holdings to the ETF share class on a recurring, non-taxable basis.
The Regulatory Door Opened by Vanguard’s Expiring Patent
For decades, Vanguard was the only firm permitted to run ETF share classes within mutual funds, protected by a patent that expired in May 2023. After that, nearly 80 fund managers filed petitions with the U.S. Securities and Exchange Commission (SEC) for exemptive relief to add ETF share classes of their own, according to ISS Market Intelligence.
The SEC’s September 2025 decision to approve Dimensional Fund Advisors’ application—the first such approval for an actively managed strategy—effectively became the starting signal for other asset managers to take their own shots at the opportunity. The managers who followed Dimensional’s original 2023 filing represent more than half of the active mutual fund market, approximately $8.5 trillion in assets as of August 2025, according to ISS Market Intelligence. Following the SEC’s indication of approval, more than 60 sponsors re-filed share class relief applications, according to a November 2025 analysis by Brown Brothers Harriman.
Industry surveys show strong demand for the structure. 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’s entry into the market signals continued momentum in what industry observers have called a structural shift in fund management. The ETF share class model blends the tax efficiency of ETFs with the scale and track record of established mutual fund strategies, potentially reshaping how investors access active management.
Sources
- Fidelity Newsroom — Official announcement of the three ETF share class launches, fund details, expense ratios, and portfolio manager information.
- InvestmentNews — Context on the ETF share class industry trend, Vanguard’s patent expiration, SEC approval of Dimensional Fund Advisors, and advisor and investor demand surveys.
- ISS Market Intelligence — Data on nearly 80 fund managers filing for exemptive relief and the $8.5 trillion in active mutual fund assets represented by those managers.
- Brown Brothers Harriman — Analysis of ETF share class applications and investor survey results on preference for the structure.
