The Fidelity Total Bond ETF (NYSEARCA:FBND | FBND Price Prediction) sells itself as a one-ticket solution for the bond sleeve of your portfolio.
It's no secret that the fixed income landscape has come back to life after years of relative quiet. Where investors once had to really look for sources of income or yield, the live rate market has brought plenty of opportunities to fixed income.
Fidelity Total Bond ETF offers a more conservative, actively managed fixed-income exposure with a low 0.36% expense ratio and $25B in assets. FBND's high-quality portfolio, dominated by U.S. Treasuries and Government debt, results in a modest yield (4.68%) and reduced capital loss risk. Despite higher duration (6.02 years) and interest rate sensitivity, FBND has outperformed both the Bloomberg Aggregate Index and BND since inception.
Fidelity Total Bond ETF (NYSEARCA:FBND) pays income every single month, holds roughly $25 billion in assets, and carries an expense ratio of just 0.36%.
For the full year, the Fidelity Total Bond ETF - NAV Return was 7.58%, compared to 7.30% for the Bloomberg U.S. Aggregate Bond Index. The U.S. Federal Reserve followed through with additional policy rate reductions in October and December, bringing the federal funds rate down to a target range of 3.5% to 3.75%. Versus the Aggregate index, the ETF was overweight risk assets at year-end, with a tilt toward short- and intermediate-term investment-grade corporate credit and high-yield securities.
Fidelity Total Bond ETF offers stable income via active management, outperforming its benchmark across all measured periods. FBND's 5.68-year duration and 4.52% 30-day yield position it for moderate interest rate sensitivity and competitive carry. Portfolio is heavily US-weighted, with 67% in AAA-rated investment grade corporates and 39% in government debt.
Investors who want to focus on steady monthly payouts often look for investments that don't expose them to excessive credit risk.
One of my retirement investing platforms happens to be Fidelity, so I've been diving deeper into which exchange traded funds (ETFs) may fit my risk profile and investing time horizon better than others of late.
Stocks might still be the preferred investment of choice. But exchange traded funds (ETFs) are quickly gaining ground.
A reader asked for my thoughts on FBND, a diversified bond ETF focusing on high-quality, medium-term bonds. It is quite close to its benchmark, BND or AGG, with several important benefits and advantages. These include a higher 4.5% yield and consistent outperformance, even after accounting for slightly higher credit risk.
Consider these ETFs for a change of pace.
On this week's episode of ETF Prime, VettaFi's Head of Research Todd Rosenbluth discusses the rise of active ETFs and anticipated ETF share class structure. Later, Fidelity's Eric Granat and Christine Thorpe spotlight the Fidelity Hedged Equity ETF (FHEQ) and the Fidelity Total Bond ETF (FBND).