Fidelity adds ETF share classes to three mutual funds

Fidelity Investments launched ETF share classes on June 18, 2026, converting three existing mutual fund strategies into ETF share classes: the Fidelity Intermediate Municipal Income ETF (FIMU), the Fidelity Real Estate Income ETF (FREI) and the Fidelity Short-Term Bond ETF (FSTB). Investors who hold shares of those mutual funds can convert their mutual fund shares directly into the new ETF share classes.

All three offerings focus on fixed income. FIMU and FREI target income-seeking investors, while FSTB offers short-term bond exposure. Fidelity manages $17.9 trillion in assets under administration and is the fifth asset manager to add ETF share classes for mutual funds.

Asset managers have obtained exemptive relief from regulators to offer the same investment strategies in both mutual fund and ETF formats. Exemptive relief supports features such as share conversion and the operational mechanics required for ETF structures. Fidelity referenced that regulatory environment in its announcement.

Greg Friedman, head of ETFs at Fidelity Investments, wrote in a press release: “We are at an inflection point in the ETF industry, with exemptive relief providing the opportunity to offer additional product choice for investors.” He added the selected funds’ long-term performance histories and portfolio teams made them suitable candidates for ETF share classes.

Todd Rosenbluth, head of research at VettaFi, wrote this month that the rollout of ETF share classes across the asset management industry has been measured and deliberate. Rosenbluth wrote that the transition could allow large pools of mutual fund assets to enter the exchange-traded market and serve as a gateway for firms expanding into active ETFs.

Fidelity highlighted the direct conversion feature, which lets mutual fund holders move into ETF shares without buying ETF units on the open market. Fidelity added the initial group of ETF share classes focuses on fixed income and that the firm may expand the approach to other strategies over time.