Changes to cost structures may be on the horizon for investment managers and investors as Fidelity Investments introduces a new charge aimed at covering its service operation expenses. Several exchange-traded fund (ETF) managers have recently entered into revenue-sharing agreements with Fidelity Investments, a significant move for the ETF industry. This initiative is part of Fidelity’s efforts to enhance its position in the competitive sector, coinciding with a growing interest in ETFs among investors.
The focus on enhancing Fidelity’s brokerage platform in these agreements may result in adjustments to cost structures for investment managers and investors. The crypto sector is also abuzz with news of Fidelity’s collaboration with ETF managers on revenue-sharing arrangements. In response to Fidelity’s proposed service charge, nine ETF providers have signed on to these agreements.
Investors who choose not to participate in the revenue-sharing agreement may face a fee of up to $100 or 5% of their purchasing position. The purpose of this charge is to cover Fidelity’s expenses related to service operations and technological updates. CEO David Young of Regents Park Funds described the situation as a “big undertaking,” emphasizing the need to balance platform maintenance expenses, which drove Fidelity’s decision to explore revenue-sharing. The primary motivation for Young’s business to join the arrangement was to avoid excessive service fees.
The ETF industry’s rapid expansion has necessitated new strategies for platforms like Fidelity to manage the influx of ETFs. While revenue sharing is common in the thriving ETF industry, it is less prevalent in the more established field of wealth management.
In other news, Norwegian authorities have recovered $5.7 million from the $600 million Ronin hack.
