INCLINE VILLAGE, Nev. - Fidelity Investments will be expanding its ETF offerings beyond the single Nasdaq Composite ETF. It is believed that they will offer active sector ETFs, similar to their Select Sector mutual funds. They are late to the ETF party, however, and competition is so stiff that a record number of ETF providers are closing shop, leaving the market to a few dominant players. That's not to say the ETF business is shrinking. ETFs assets are at a record high and the three largest providers, iShares, State Street Global Advisors, and Vanguard Group, have the lion's share. Three out of every four dollars invested in ETFs go to those three companies.It's not surprising that these three are the dominant providers, because they were the first to enter the ETF arena. They have the assets and trading volume that investors want. Will Fidelity's new ETFs be popular? Fidelity has the marketing power and distribution experience, so they could prosper, but they'll need to undercut the competition, and their own mutual funds, with lower fees. Performance counts, too. Since they will offer active sector ETFs, they'd better outperform the static sector index ETFs from iShares. The industry is dominated by a few players as most investors find little reason to look beyond the popular ETFs. That's why Scottrade and Russell Investments recently announced that they are closing the majority of their ETFs. In time we'll know if Fidelity's active ETF mix is worth following.- David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.