CORE DIVERSIFICATION
Fidelity Models with Separately Managed Accounts
Give your clients more choice and flexibility with Fidelity's model portfolios with separately managed accounts (SMAs)—diversified portfolios that target a range of risk levels.
Strategy details
Target Asset Mixes: 5Style: Blend of active and passive funds
Fund Universe: Fidelity Advisor Funds, Fidelity Index Funds, and a core Fidelity Money Market Fund
Investment minimum: $300,000
Model Reallocation:*** Quarterly
Fidelity Model Portfolios with SMA
These models seek to provide enhanced risk-adjusted return across the risk spectrum, with five target asset mixes ranging from conservative to growth. Created with an open architecture approach, these model portfolios use a blend of mutual funds, ETFs and SMAs from Fidelity and other third-party asset managers.
Strategy details
Target Asset Mixes: 5Style: Blend of active and passive funds
Fund Universe: Mutual Funds, ETFs, and SMAs from Fidelity; ETFs and SMAs from Third-Parties; and a Core Sweep Fund
Investment minimum: $1,000,000
Model Reallocation:*** Quarterly
Fidelity Tax-Aware Model Portfolios with SMA
These models seek to enhance risk-adjusted total return across the risk spectrum, with five target asset mixes ranging from conservative to growth. Using an open architecture approach, they include mutual funds from Fidelity along with ETFs and SMAs from Fidelity and other asset managers. As part of their tax-aware strategy, these model portfolios aim to reduce the impact of taxes on returns by including municipal bonds, and can take advantage of SMAs’ ability to enhance tax efficiency through techniques like tax-loss harvesting.
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*** If circumstances warrant, there may be off-cycle reallocations.
Note: Not all resources described are available to Fidelity Model Portfolios.
The information presented herein does not make an offer or solicitation to buy or sell any securities or services, and is not investment advice. FIWA does not provide legal or tax advice and we encourage you to consult your own lawyer, accountant, or other advisor before making an investment.
Fidelity Model Portfolios are made available to financial intermediaries on a non-discretionary basis by Fidelity Institutional Wealth Adviser LLC ("FIWA"), a registered investment adviser, or by Fidelity Distributors Company LLC ("FDC"), a registered broker-dealer, (collectively "Fidelity"). Fidelity is not acting as a fiduciary or in any advisory capacity in providing this information. The information is designed to be utilized by you solely as a resource, along with other potential sources, in providing advisory services to your clients. You are solely responsible for determining whether the Models, the investment products included in the Models, and the share class of those products, are appropriate and suitable for you to base a recommendation or provide advice to any end investor about the potential use of the Models.
With the exception of the Fidelity Target Allocation and Target Allocation Index-Focused Models, which consists solely of Fidelity mutual funds, the Models may consist of Fidelity mutual funds, Fidelity ETFs, and third-party ETFs, which include iShares ETFs sponsored by BlackRock. These investment products that comprise the models are available only in the share class designated by FIWA when made available through the Models. FIWA does not seek to offer investment products or share classes through the Models that are necessarily the least expensive. In some cases, the investment products in the Models may have a lower-cost share class available on a stand-alone basis for purchase outside of the Models, or that may be available to other types of investors. Use of the Models will result in the payment of fees to the Fidelity funds and Fidelity ETFs in the Models as provided for in the prospectus to each such investment product. The fees received from investment in the funds and ETFs will be shared by various affiliates, including FIWA, involved in distributing and advising the Models, the Fidelity funds, and the Fidelity ETFs in the Models.
Fidelity does not have investment discretion and does not place trade orders for any of your clients' accounts. Information and other marketing materials provided to you by Fidelity concerning the Models may not be indicative of your client's actual experience from investing in one or more of the investment products included in the Models. The Models' allocations and data are subject to change.
Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation, credit, and default risks for both issuers and counterparties.
The model portfolios do not attempt to consider the effect of income taxes on performance or returns and does not reflect any opinion on the tax-appropriateness of the portfolio for any investor. Depending on your tax situation, municipal bond funds may be more appropriate for you. Model portfolios do not consider the effect of taxes, fees, and/or expenses associated with investing. Please consult with your investment or tax advisor, if applicable, prior to taking action.
Generally, among asset classes stocks are more volatile than bonds or short-term instruments and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Although the bond market is also volatile, lower-quality debt securities including leveraged loans generally offer higher yields compared to investment-grade securities, but also involve greater risk of default or price changes. The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities.
Please see the mutual fund and ETF prospectuses, applicable ADV documents, and/or related offering documents for more details on compensation, expenses and fees, conflicts of interest, investment strategies and risks.
Because of its narrow focus, sector investing tends to be more volatile than investments that diversify across many sectors and companies. Each sector investment is also subject to the additional risks associated with its particular industry.
There is no guarantee that a factor-based investing strategy will enhance performance or reduce risk. Before investing, make sure you understand how a factor investment strategy may differ from a more traditional index-based or actively managed approach. Depending on market conditions, factor-based investments may underperform compared to investments that seek to track a market-capitalization-weighted index or investments that employ full active management.
Fidelity Model Portfolios with SMA (separately managed accounts) are provided to financial intermediaries ("Intermediary") on a non-discretionary basis by Fidelity Institutional Wealth Adviser LLC ("FIWA"), a registered investment adviser. Information about the Models may be provided by representatives of FIWA, or its broker-dealer affiliates Fidelity Distributors Company LLC ("FDC"), Fidelity Brokerage Services LLC ("FBS"), and/or National Financial Services LLC.
Intermediary Use of Fidelity Models Portfolios with SMA
The information presented is designed to be utilized solely by Intermediaries solely as a resource, along with other potential sources, in providing advisory services to their clients. Intermediaries are solely responsible for implementing the Fidelity Model Portfolios with SMA, in whole or in part, based on their client's objectives, guidelines and restrictions, including choosing a platform or for placing trades in Investor accounts, including the selection of broker-dealers and the execution of transactions. Further, all management and support of such accounts, such as investment allocation, restrictions or tax harvesting is also the responsibility of the Intermediaries. Fidelity does not have investment discretion and does not place trade orders for any accounts in the Fidelity Model Portfolios with SMA. Information and other marketing materials provided by Fidelity concerning the Fidelity Model Portfolios with SMA Fidelity Model Portfolios with SMA may not be indicative of a client's actual experience from investing in one or more of the investment products included in the Models. The Fidelity Model Portfolios with SMA allocations are subject to change. Not all of the underlying investments in the Fidelity Models Portfolios with SMA are available across all platforms on which Fidelity Model Portfolios with SMA may be made available to Intermediaries and capabilities of platforms vary.
The investment products that comprise the Fidelity Model Portfolios with SMA are available only in the share class or equivalent designated by FIWA when made available through the Fidelity Model Portfolios with SMA. FIWA does not seek to offer investment products or share classes through the Fidelity Model Portfolios with SMA that are necessarily the least expensive. In some cases, the investment products in the Fidelity Model Portfolios with SMA may have a lower cost share class or equivalent investment available on a stand-alone basis for purchase outside of the Fidelity Model Portfolios, or that may be available to other types of investors. Intermediaries are solely responsible for determining whether a given share class or classes, applicable investments or Fidelity Model Portfolios with SMA are appropriate for use with their clients.
Fidelity Model Portfolios with SMA Construction and Conflicts
Fidelity Model Portfolios with SMA may consist of Fidelity mutual funds, Fidelity ETFs, Fidelity Advisor SMAs, and third-party mutual funds, ETFs, and SMAs. The Fidelity Model Portfolios with SMA are constructed by FIWA using a systematic approach in conjunction with a quantitative and qualitative methodology for selecting mutual funds, ETFs or SMAs. FIWA uses an algorithmic approach to initially identify a set of investment options whose overall risk characteristics, when viewed as a portfolio, generally meet the design parameters, with final portfolio construction subject to change based on a qualitative overlay. In further limiting the universe of investments, additional weight is allocated to products in the Fidelity Model Portfolios with SMA that provide revenue to Fidelity as described below. These products may be unaffiliated. Fidelity Models Portfolios with SMA are also constructed to meet minimum revenue thresholds to Fidelity.
As applicable, use of the mutual funds and ETFs in the Fidelity Model Portfolios with SMA will result in the payment of fees to the mutual funds and ETFs in the Models as provided for in the relevant prospectus to each such investment product. The fees received from investment in the included Fidelity mutual funds, ETFs and Fidelity Advisor SMAs will be shared by various Fidelity affiliates involved in developing and distributing certain models, the Fidelity funds, and the Fidelity ETFs. When Fidelity Model Portfolios with SMA invest in certain non-Fidelity funds and ETFs, Fidelity affiliates receives flat, annual fees (1) from a limited number of unaffiliated investment managers for maintaining the infrastructure to support their mutual funds and ETFs held in accounts on Fidelity's brokerage platform and (2) from approximately 18 unaffiliated investment managers to participate in a marketing, engagement, and analytics program established by Fidelity. In addition, Fidelity receives compensation for certain services provided to iShares ETFs in connection with reduced or commission-free ETFs, and compensation in connection with a marketing program with respect to iShares.
There is no guarantee that the Fidelity Model Portfolios with SMA, if implemented in whole or in part by an Intermediary for their Investor client, will achieve any particular result.
Investment involves risk, including the risk of loss. Generally, among asset classes stocks are more volatile than bonds or short-term instruments and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Although the bond market is also volatile, lower-quality debt securities including leveraged loans generally offer higher yields compared to investment grade securities, but also involve greater risk of default or price changes. The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities. Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market or economic developments, all of which are magnified in emerging markets. SMAs may have additional risks.
Diversification does not ensure a profit or guarantee against a loss.
"Fidelity Investments" and/or "Fidelity" refers collectively to FMR LLC, a U.S. company, and its subsidiaries, including but not limited to Fidelity Management & Research Company LLC (FMR) and FIWA.
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