FBND ETF

The nine most-popular ETFs in November by net flows provide a range of exposures as investors look to opportunities in various segments of the market.

FBND has provided superior risk-adjusted returns through dynamic allocation between investment-grade and junk bonds. Despite active management, the fund maintains a conservative risk profile with 36.12% in U.S. government bonds and only 10.10% in junk bonds. The ETF has consistently outperformed the Vanguard Total Bond Market ETF (BND) in both price performance and total returns, showcasing effective active management.

Fidelity Total Bond ETF (FBND) offers exposure to more conservative fixed-income instruments, with a meaningful weight in U.S. Treasuries. FBND is primarily an intermediate-term fixed-income fund with a duration of 6 years, which should benefit from a lower rate environment. We compare several funds to FBND today and try to lay out the case for each under different situations going forward.

Investors in Fidelity Total Bond ETF can access various types of bonds, such as high-yield, investment grade, and emerging market bonds. With a yield of 5.13% and a 4-star rating from Morningstar, the ETF could benefit from potential rate cuts in response to weak US economic indicators, leading to a possible bond rally and capital gains for investors.

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.

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

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.

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.

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.