Deep experience, solid resources, and thoughtful execution make Fidelity Total Bond one of the best core-plus offerings.

This strategy takes a flexible approach, but the team has managed it well. Besides investing in the typical investment-grade corporate credit, mortgages, and U.S. Treasuries that constitute the strategy's Bloomberg US Aggregate Bond Index benchmark, co-lead managers Ford O’Neil and Celso Munoz and their comanagers may allocate up to 20% in non-investment-grade bonds, including high-yield and emerging-markets debt, when the team finds market valuations compelling. Relative to more-conservatively positioned peers in the intermediate core-plus bond Morningstar Category, this provides the strategy with an edge in risk-on markets, but the flexibility can invite more volatility. The strategy's duration usually sits within a third of a year of its index, which can act as a ballast when rates spike in years such as 2022.

O'Neil and Munoz, in collaboration with sector specialists from across Fidelity's fixed-income cohort, has made shrewd allocation calls for the strategy. Exposed to a tad more credit than competitors during the depths of the pandemic panic in early 2020, the strategy fell behind, but the team used Fidelity's wide resources and the portfolio's buying power to add a substantial wash of new issues and investments in slumping names with strong fundamentals to beat nearly three fourths of peers that year. The strategy's rebound continued in 2021 with a top-quartile showing thanks to its higher allocation to lower-rated debt. Keeping its duration near the index has helped the strategy weather relative rate volatility. As rates spiked over 2022, the strategy’s 12.8% loss, while painful, edged out its typical peer's 13.5% loss given its moderately shorter duration and underweighting in mortgages. The strategy’s 3.4% return for the year to date through July 2023 handily beat the typical peer’s 2.7% gain thanks to higher exposure to high-yield bank loans and U.S. corporates, as well as solid security selection in names like Warner Bros Discovery WBD.

This strategy has excelled under O’Neil. From his December 2004 start through July 2023, the Z shares' 3.7% annualized return beat the 3% gain of its index and the 3.4% median return of a group of distinct category peers, all while keeping the strategy's volatility lower than that of its typical peer over that period.

Analyst Rating

Bond with this fund.

Senior Analyst

Mike Mulach

A reasonable and repeatable approach, supported by the firm's deep research and a sharp set of proprietary tools, earns this strategy a High Process Pillar rating.

In conjunction with a macroeconomic research group and specialists from across Fidelity’s fixed-income cohort, co-leads Ford O'Neil and Celso Munoz formulate a coherent view of the broad investment landscape. They then use that view to vet market opportunities consistent with the strategy's mandate and adjust sector allocations and yield-curve preferences accordingly while keeping duration roughly in line with that of their Aggregate Index benchmark. With the portfolio contours in place, they consult with a deep team of credit- and securitized-focused managers to identify securities for inclusion.

In the wake of 2008's global financial crisis, the firm's fixed-income group not only improved communication and accountability across its various teams but also invested heavily in operations, developing a bevy of tools for portfolio managers to slice a broad portfolio's risks and identify opportunities in individual credits and mortgage pools. These tools enable multifaceted views of risk in the portfolio and, with the insights and efforts of the strategy's dedicated quantitative analyst, strengthen the process.

High

Process

Experienced leadership, clear succession planning, and a robust pool of researchers, analysts, and traders support the strategy's High People Pillar rating.

Standout management coupled with thoughtful succession planning are a draw. A nearly three-decade Fidelity veteran, Ford O’Neil has capably led this strategy since 2004. After working closely here with O’Neil since late 2017, comanager Celso Munoz was named colead of this strategy alongside O’Neil in October 2022. O’Neil’s longtime heir apparent Munoz is a good pick for the job given his corporate credit research background and his long history working with O’Neil. At the same time, senior securitized manager Franco Castagliuolo was named here in recognition of his good work on securitized debt. Co-leads O’Neil and Munoz orchestrate a team of comanagers, including Jeff Moore, another long-tenured Fidelity contributor with whom he shares a seat on the core bond desk, as well as Michael Foggin, who provides guidance on non-U.S. exposures. Still, there has been some team turnover: Michael Weaver, added in early-2018 to help steer the strategy’s high-yield credit sleeve, left Fidelity in mid-2023. Ben Harrison, Fidelity’s former high-yield research director, swiftly replaced Weaver here in June. While Harrison’s track record managing core high-yield portfolios is relatively short, he has a long history working with O’Neil and draws on a deep and experienced high-yield credit cast.

Management benefits from strong support. Standout sector-focused teams for mortgages, municipals, and credit contribute to discussions on relative valuation, while robust analyst teams generate fundamental analysis and provide security recommendations. Additionally, quant analysts sit next to relevant portfolio managers, as do traders, who provide swift feedback on flows and sentiment in the bond markets.

People

Fidelity earns an Above Average Parent rating because of its ability to stay ahead of its competition.

The firm's successful stock-picking mutual funds fueled its rise to prominence, and it has adapted well to investor preferences that have shifted markedly over the past two decades. Index funds and exchange-traded funds have garnered most of the industry's flows as money has gushed from actively managed products—Fidelity's included. Yet overall, the asset-management division has continued to achieve positive organic growth by introducing or maintaining aggressive pricing on its own suite of passively managed funds and expanding its menu of client-demanded investment structures, such as managed accounts and collective investment trusts. These moves are made possible by the firm's strong distribution network, scale, established brand, and willingness to tolerate losses on some products in pursuit of broader strategic objectives.

The firm is not without blemishes. It could stand to rationalize its lineup of active equity funds and do better to maintain continuity in an equity fund's portfolio construction as the fund's leadership inevitably changes.

Overall, the firm has served its funds' investors well. It boasts a topnotch fixed-income division and remains home to some of the industry's most talented equity managers and a strong team supporting its well-run target-date series.

Above Average

Parent

Fidelity Total Bond ETF

FBND is an actively managed broad market bond fund that uses the Barclays US Universal Bond Index to guide its sector allocation and duration exposure.

SPDR Bloomberg 1-3 Month T-Bill ETF

Invesco QQQ

Invesco S&P 500 Equal Weight ETF

Vanguard S&P 500 ETF

Overall, ETFs pulled in $24.5 million in capital last week, taking year-to-date inflows to $196.4 billion.

5 Hot ETFs of a Tumultuous Week

iShares Core U.S. Aggregate Bond ETF

Grayscale Bitcoin Trust

iShares Core S&P 500 ETF

iShares iBoxx $ Investment Grade Corporate Bond ETF

Energy Select Sector SPDR Fund

During LSEG Lipper's fund flows week that ended April 10, 2024, investors were overall net redeemers of fund assets (including both conventional funds and ETFs) for the third week in four, removing a net $29.7 billion.

U.S. Weekly FundFlows Insight Report: Short/Intermediate Investment-Grade ETFs Set Record Weekly Inflows, Attracting $3.5 Billion

The Fidelity Total Bond ETF has delivered solid outperformance since on an inception-to-date basis. FBND has a reasonable expense ratio of 0.36%, which is roughly in line with other products in the same investment category. The fund has exhibited strong historical risk-adjusted performance relative to its benchmark.

FBND: Historical Outperformance Set To Continue

What was one of the most notable narratives in investing in 2023? Big crises?

The Rise of Active Bond ETFs

2023 saw active ETFs add to their AUM in a major way. Managers looked to take advantage of ETFs' tax efficiency as well as active funds' ability to ride volatility in a complicated year.

Fidelity Investments Climbs the Active ETF Ranks

Money market funds have garnered more than $1 trillion in flows this year as investors have flocked to safety and appealing yields. While some degree of cash allocation is appropriate, investors may have gone too far.

The Risk in Overweighting Money Market Funds

Fidelity Total Bond ETF is a potential investment option as the Federal Reserve's rate hike cycle nears its end. FBND is an actively managed ETF that primarily invests in investment-grade debt securities, with a diverse portfolio across various sectors. FBND offers a high level of current income and its active management strategy may provide additional investment opportunities.

FBND: A Good Core Potential Bond Allocation

Fidelity Low Duration Bond Factor ETF

If the Federal Reserve isn't done raising interest rates, many advisors believe they're at least close to being done. And according to Brian Donnelly, fixed income strategist at Fidelity Investments, that's good news for bond funds.

The Ending(?) Rate Hike Cycle Is Good News for Bond Funds

iShares iBoxx High Yield Corporate Bond ETF

Xtrackers USD High Yield Corporate Bond ETF

SPDR Bloomberg High Yield Bond ETF

PIMCO Enhanced Short Maturity Active ETF

iShares National Muni Bond ETF

iShares Short Treasury Bond ETF

iShares 20+ Year Treasury Bond ETF

Vanguard Tax-Exempt Bond Index ETF

BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

We are focusing a lot of attention on fixed income at VettaFi in October. This week, we are hosting webcasts with AllianceBernstein and State Street Global Advisors.

Is Fixed Income ETF Sentiment Shifting?

Invesco Senior Loan ETF

Capital Group Core Plus Income ETF

Calamos Convertible Equity Alternative ETF

SPDR Bloomberg Convertible Securities ETF

Amplify CWP Dividend & Option Income ETF

iShares JP Morgan USD Emerging Markets Bond ETF

Franklin Senior Loan ETF

iShares Floating Rate Bond ETF

SPDR Bloomberg Investment Grade Floating Rate ETF

iShares Convertible Bond ETF

Pimco Senior Loan Active Exchange-Traded Fund

Simplify Interest Rate Hedge ETF

T Rowe Price US High Yield ETF

Hello, VettaFi Voices! The Wall Street Journal mentioned today that the 10-year Treasury yield is the highest it's been since 2007 as we head into another earnings season.

VettaFi Voices On: Investments for a (Not so) Scary Market

Vanguard Total Bond Market ETF

PIMCO Active Bond ETF

Capital Group Core Bond ETF

iShares Core Total USD Bond Market ETF

JPMorgan Core Plus Bond ETF

T Rowe Price Total Return ETF

USAA Core Intermediate-Term Bond ETF

Bond ETFs represent approximately 20% of the industry assets. Yet they have gathered more than 40% share of the net inflows in the first nine months of 2023.

Chart of the Week: Benefits of Active and Passive Bond Funds

Avantis International Small Cap Value ETF

Avantis Emerging Markets Equity ETF

Avantis US Equity ETF

Avantis U.S. Small Cap Value ETF

Capital Group Dividend Value ETF

Capital Group Growth ETF

Dimensional US Core Equity 2 ETF

Dimensional International Core Equity Market ETF

Dimensional Core Fixed Income ETF

Dimensional Emerging Markets Core Equity 2 ETF

Dimensional Emerging Markets Value ETF

Dimensional International Core Equity 2 ETF

Dimensional International Value ETF

Dimensional US Equity ETF

Dimensional US High Profitability ETF

iShares MSCI Emerging Markets ETF

First Trust TCW Opportunistic Fixed Income ETF

Janus Henderson AAA CLO ETF

JPMorgan Equity Premium Income ETF

JPMorgan Nasdaq Equity Premium Income ETF

Janus Henderson Mortgage-Backed Securities ETF

Putnam ESG Core Bond ETF

PGIM Ultra Short Bond ETF

And, plenty of ink has been spilled about how much money has gone into active ETFs in 2023, and from a pure top-line flows perspective, it's true. A significant chunk of the $289 billion that has entered U.S.-listed ETFs year to date went into active products — 22%, in fact.

2023's Overactive Active ETF Flows Are Mostly a Mirage

Federal Reserve Chairman Jay Powell's remarks at Jackson Hole will be closely watched by stock and bond market participants. Economists are interested in whether Powell will address a possible adjustment in the neutral effective Fed Funds rate target. The Citigroup Economic Surprise Index remains strong, leading to a rise in bond yields while hard data continues to run hot, pressuring Treasuries.

Jackson Hole Preview: Powell Speech, Real Yields In Focus, FBND A Hold

American Century Multisector Income ETF

Celso Munoz, a portfolio manager with Fidelity Investments, said that he thinks “fixed income is incredibly attractive right now.” On a panel discussing multi-sector fixed income at VettaFi's Fixed Income Symposium, Munoz said that he likes Treasuries on the intermediate part of the curve.

Fixed Income Managers Find Attractive Opportunities Across Multiple Sectors

Blackrock Flexible Income ETF

Capital Group Short Duration Income ETF

BlackRock Ultra Short-Term Bond ETF

In the three-year period ended 2022, 48% of actively managed investment-grade intermediate fixed income mutual funds outperformed the Bloomberg US Aggregate Bond Index, per the SPIVA Scorecard. This contrasts with just 26% of active U.S. large-cap equity mutual funds outperforming the S&P 500 Index.

What's Inside Active Bond ETFs

Fidelity Blue Chip Growth ETF

Fidelity Low Volatility Factor ETF

Fidelity Disruptive Technology ETF

Fidelity Magellan ETF

Fidelity MSCI Information Technology Index ETF

Fidelity NASDAQ Composite Index

iShares Edge MSCI Min Vol USA ETF

Fidelity's two largest ETFs are index-based. However, that might be short-lived as the firm increases its commitment to ETF industry through active products.

Fidelity Poised to Be a Active ETF Leader

In the latest addition to the burgeoning ETF landscape, Fidelity has filed to convert six mutual funds to ETFs. The funds all share the same “Enhanced Index Fund” branding and range from large- to small-cap strategies.

6 Fidelity Funds Converting to ETFs

Vaneck Morningstar SMID Moat ETF

Vanguard Total World Stock ETF

Veteran MarketWatch columnist Mark Hulbert recently revived the supposedly dead 60/40 portfolio. Once, the top ETFs for a balanced portfolio combined equities and fixed income in a 60/40 split.

The 3 Best ETFs to Buy to Balance Risk and Reward

Fidelity Covington Trust-Fidelity Crypto Industry And Digital Payments Etf

Fidelity MSCI Real Estate ETF

Fidelity Disruptive Automation ETF

Fidelity Disruptive Communications ETF

Fidelity Disruptive Finance ETF

Fidelity Disruptive Medicine ETF

Fidelity Disruptors ETF

In the latest big news for the burgeoning ETF landscape, Fidelity will convert six mutual funds to ETFs. The firm's suite will see its thematic ETFs investing roster expand and diversify significantly.

Fidelity Converts Six Funds to Thematic ETFs

FBND: What Is The Answer For A Potential Recession? We Think Bonds.

FBND: What Is The Answer For A Potential Recession? We Think Bonds

First Trust Limited Duration Investment Grade Corporate ETF

JPMorgan Ultra-Short Income ETF

This trend is poised to continue this year.

Actively Managed ETFs Claim Outsized Portion of 2023 Inflows

ProShares Bitcoin Strategy ETF

ProShares UltraPro Short QQQ

SPDR DoubleLine Total Return Tactical ETF

ProShares UltraPro QQQ

VettaFi's head of research Todd Rosenbluth got active on Yahoo Finance to discuss tech's ongoing slide, leveraged and inverse ETFs, and the performance of active funds, particularly on the fixed income side of the ledger.

Todd Rosenbluth Gets Active on Yahoo Finance

iShares Trust iShares 1-5 Year Investment Grade Corporate Bond ETF

PIMCO Enhanced Low Duration Active ETF

 SPDR Blackstone Senior Loan ETF

While 2022 is not finished, two things are quite likely to be a fact in early 2023.

Don't Get AGG-ravated, Expand Your Fixed Income Toolset

Fidelity Cloud Computing ETF

Fidelity Stocks for Inflation ETF

Fidelity Small-Mid Factor ETF

July may be a great time to check out the best Fidelity ETFs, as some top names are currently for sale at bargain valuations. The post 7 Best Fidelity ETFs to Buy in July appeared first on InvestorPlace.

7 Best Fidelity ETFs to Buy in July

Fidelity Total Bond ETF (FBND) uses a mix of Governments, Corporates, and Securitized assets. It compares itself against two Bloomberg US Aggregate Bond Indices. Bond ETFs have performed poorly in 2022 but are still in many portfolios. Along with analyzing FBND, this article compares it against several better known Bond ETFs.

Fidelity Total Bond ETF Performing Well Compared To Better Known ETFs, But.

News for Fidelity Total Bond ETF ETF (FBND)