The funds being converted into ETFs are:
Fidelity Disruptive Automation Fund
Fidelity Disruptive Communications Fund
Fidelity Disruptive Finance Fund
Fidelity Disruptive Medicine
Fidelity Disruptive Technology Fund
Fidelity Disruptors Fund
The issuer originally filed for the conversions in November, and the funds are expected to be converted on June 9, except for the Fidelity Disruptors fund, which will be converted on June 16.
The funds’ names will remain the same except that “Fund” will be replaced with “ETF.” Each fund attempts to invest in companies with “disruptive” or “unconventional” business strategies. All six funds have expense ratios of 0.5% and were started in April 2020.
The specific disruptive industry funds currently hold between 35 and 70 holdings, with the Disruptors fund being much more spread out, with more than 200.
The funds don’t always stick within the standard boundaries of sectors; for example, the Fidelity Disruptive Communications Fund holds Amazon.com Inc., a consumer discretionary stock, and American Tower Corp., a real estate investment trust.
The funds together have $760 million in assets, according to Fidelity’s website. Currently, the 46 “disruptive tech” thematic ETFs on the market have $16.6 billion in assets under management, making up 22.3% of thematic ETFs by AUM, according to ETF Action.
The environment for thematic ETFs has changed since the filing in November. While thematic ETFs have seen substantial inflows over the past three years, with $69.5 billion flooding in during that period—with 10% of that going to disruptive tech ETFs—the past year has seen a significant reversal.
In the past year, thematic ETFs overall have seen $7.2 billion in outflows overall, with May being the 14th consecutive month of net outflows. A disproportionate 46% of those outflows came out of disruptive tech ETFs.
Currently, the only segment of thematic ETFs with positive 12-month trailing net inflows is ETFs with multiple themes. All other categories of thematic ETFs from sustainability to fintech had negative outflows.
This comes after fairly consistent underperformance by thematic ETFs, with more than half of thematic funds down since their launch as of the end of last year.
Contact Gabe Alpert at firstname.lastname@example.org