Fidelity Investment Grade Securitized ETF (FSEC)

Overview

This fund focuses on investing primarily in a diversified portfolio of investment-grade securitized debt securities, emphasizing both medium and high quality. By allocating at least 80% of its assets towards these financial instruments, the fund aims to provide a stable investment vehicle for those interested in securitized debt. Investment-grade securitized debt securities are those deemed to have a lower risk of default and therefore typically offer investors more security in return. These securities are often issued by various entities including the U.S. government and its agencies or instrumentalities, foreign governments, and corporations. An interesting aspect of this fund is its investment in U.S. government securities issued by entities chartered or sponsored by Congress. These entities operate independently in the financial market, and their securities do not have the direct backing (neither issued nor guaranteed) of the U.S. Treasury, distinguishing them from conventional Treasury securities.

Products and Services

• Investment-Grade Securitized Debt Securities

  The fund predominantly invests in securitized debt securities that are considered investment-grade, indicating they are of medium to high quality. These securities include a variety of debt instruments such as bonds and other financial obligations that are backed by pools of assets, providing a level of security to investors. By focusing on investment-grade securities, the fund aims to maintain a lower risk profile.

• Repurchase Agreements

  Part of the fund's strategy includes engaging in repurchase agreements for the securitized debt securities it holds. Repurchase agreements (repos) are short-term borrowing agreements where one party sells securities to another with the promise to repurchase them at a later date, usually at a higher price. This technique allows the fund to potentially increase liquidity and manage cash flow more efficiently.

• U.S. Government and Agency Securities

  The fund invests in securities issued by the U.S. government, its agencies, or instrumentalities. This includes a range of securities backed by the U.S. government's credit and entities chartered or sponsored by Congress. While these are not directly issued or guaranteed by the U.S. Treasury, they still carry a lower risk due to their government affiliation, appealing to investors seeking stable returns.

• Foreign Government Securities

  Expanding its portfolio globally, the fund also incorporates securities issued by foreign governments. This diversification strategy exposes investors to international markets, potentially offering different returns compared to domestic investments. Investing in foreign government securities can provide growth opportunities and risk diversification outside the United States.

• Corporate Securities

  Corporate securities form a part of the fund’s investment strategy, including bonds and other debt instruments issued by corporations. These investments can offer higher yields in comparison to government and agency securities, albeit with a higher risk. Corporate securities allow the fund to balance its portfolio by combining stability with growth opportunities.