Fidelity Seeks Broader Playground for Fund Investments
Published Date: 3/6/2025
Notice
Summary
Fidelity Covington Trust and its partners want permission to invest in more types of financial instruments than before. This change could help their funds grow by giving them more options to invest. If no one objects by March 28, 2025, the SEC will likely approve this update without a hearing.
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Daily Disclosure for New Investments
If a Fund holds Amended Order Investments, the Fund must publish on its website, daily and free of charge, all Amended Order Investments held as of the end of the prior Business Day in accordance with Rule 6c-11(c)(1)(i). The Fund's Tracking Basket will include a portion that fully discloses those investments.
Funds Allowed New Investment Types
The order would let a Fund invest in additional instruments beyond its prior permitted list, including fixed income securities, foreign investments that do not trade contemporaneously with Shares, and derivatives (these are called Amended Order Investments). This change is described in the applicants' amended application dated February 24, 2025.
Three-Year Monitoring Requirement Reset
A Fund that first acquires Amended Order Investments will be subject to a new three-year monitoring requirement starting on the date it first acquires those investments; the Adviser must monitor Tracking Error, premiums/discounts, and trading spreads and promptly call a Board meeting if Board-approved thresholds are surpassed.
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