I have a little bit different take....

I think Don Corleone knew Sonny would go into the family business (he saw his father kill Fanucci) and he believed Fredo could help him in that quest.

Fredo was unassuming, and not so quick with business skills, but had the compassion and serenity to deal with some parts of business. The Don's structure relied on many aspects, including legitimate business (like Enzo, the Baker) and the politicians (Congressmen, Judges, DA's) and the larger Italian family (like Bonasera, etc) Although Fredo would not be in the former cliques, he could be the "compassionate ear" for that larger Italian Family.

The shooting of the Don changed that for Fredo, and he had a nervous breakdown. In this, he really could not recover, and began his career of being a ladie's man, and living the life of a playboy. In this, he saw Moe Green as an older brother, and especially since the loss of Santino.

Fredo could have been something more if not for that bit of bad luck. In this, his destiny is changed from one of assisting Sonny and Michael, to betrarying his family in his quest to have "something of his own."