Fidelity Investments today announced it boosted its roster of short duration bond mutual funds with three new products to help investors combat rising interest rates.
The three new short duration bond funds are managed with varying degrees of credit and interest rate exposure, from primarily investment grade to below investment grade and with weighted average maturities between six months to five years. Short duration fixed-income products are in demand with investors who anticipate rising interest rates as the Federal Reserve begins to taper its bond purchasing program. That's because short-duration bonds are generally less sensitive to rising rates.
The Fidelity Conservative Income Municipal Bond Fund invests in money market securities and high quality investment-grade municipal debt securities with a short duration. The fund strives to maintain a dollar-weighted average maturity of one year or less. It offers a retail class (FCRDX) and an Advisor class (FMNDX), and is managed by 19-year Fidelity veteran Doug McGinley.
The Fidelity Limited Term Bond Fund (FJRLX) is a credit-oriented product that aims to generate income by investing in sectors such as corporates, commercial mortgage-backed securities, asset backed securities and government agency mortgages, which typically offer higher yields than Treasuries and government securities. The fund is lead managed by 26-year Fidelity veteran Robert Galusza. Co-manager David Prothro also co-manages the Fidelity Corporate Bond Fund.
The Fidelity Short Duration High Income Bond Fund (FSAHX) will typically invest in higher-quality, below-investment-grade bonds rated BB or B. It also intends to invest in floating rate loans and investment grade corporate bonds. The fund will maintain a dollar-weighted average maturity of three years or less. Its lead managed by 18-year Fidelity veteran Matt Conti. Co-manager Michael Plage, who co-manages the Fidelity Corporate Bond Fund, will manage this offering’s U.S. investment grade assets.
“A top concern for many bond investors today is their exposure to interest rate risk and the negative impact rising rates could have on their bond portfolios,” Charlie Morrison, president of Fidelity’s Fixed Income division, said in a statement. “For investors seeking to lower this risk, short duration funds can be an appropriate addition to a well-diversified bond portfolio.”
More information can be found at www.fidelity.com/fidelityshort.