Increased confidence in Fidelity Sustainable Core Plus Bond ETF's prospects relative to its Morningstar Category peers results in  an upgrade in this strategy's Morningstar Medalist Rating to Gold from Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns a High People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

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Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Fidelity Sustainable Core Plus Bond ETF earns an Above Average Process Pillar rating.    The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 64%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also influences the rating. Lastly, the process is limited by the parent firm's five-year retention rate of 72%, which suggests it could do more to retain its portfolio managers.

 Compared with other funds in the Intermediate Core-Plus Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Moreover, it has no significant biases in terms of credit quality, bond sectors, or maturity when compared to its category peers in recent years.   

 This strategy has a 4.4% 12-month yield, higher than its average peer's 3.9%. In addition, it has a 5.0% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio has a higher average surveyed credit quality of A, compared with the category average of BBB. Strategies that take on less credit risk can often weather more-adverse market conditions.

Above Average

Process

Fidelity Sustainable Core Plus Bond ETF earns a High People Pillar rating. Ford E. O'Neil’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 3.9 stars, indicating that their risk-adjusted returns outperformed the category average. The team is composed of a solid supporting cast of five additional named managers, averaging 14 years of listed portfolio management experience. As a team, they manage three investment vehicles together, with a Gold asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

High

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.

Parent

Fidelity Sustainable Core Plus Bond ETF

FSBD is an actively managed fund that invests in a broad array of global debt securities that exhibit positive environmental, social, and governance characteristics.

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New Fidelity ETFs Focus on Crypto, Metaverse, ESG

Fidelity Investments announced the launch of two new thematic exchange-traded funds — the Fidelity Crypto Industry and Digital Payments ETF (FDIG) and the Fidelity Metaverse ETF (FMET) — and two new fixed income sustainable ETFs — the Fidelity Sustainable Core Plus Bond ETF (FSBD) and the Fidelity Sustainable Low Duration Bond ETF (FSLD).

News for Fidelity Sustainable Core Plus Bond ETF ETF (FSBD)