An Active, Tactical Bond ETF for an Uncertain Environment

Core Viewpoint - The Federal Reserve's recent interest rate cuts have led to uncertainty in capital markets, prompting investors to seek income opportunities through actively managed ETFs like the Fidelity Tactical Bond ETF (FTBD) [1]. Group 1: Fund Objectives and Methodology - FTBD aims to achieve a high level of income through a tactical investment approach, differentiating itself from passive funds by maximizing income opportunities [2]. - The fund is benchmarked to the Bloomberg U.S. Aggregate Bond Index, focusing on delivering consistent risk-adjusted returns while diversifying fixed income exposure [2]. Group 2: Active Management Importance - Active management is crucial in the bond market due to its vastness and fragmentation, which makes it complex to navigate [3]. - FTBD leverages the expertise of its portfolio managers to effectively approach the nuanced bond market [3]. Group 3: Income Opportunities - FTBD's portfolio managers have access to a wide range of income opportunities, including investment-grade, high yield, and emerging markets debt securities with varying maturities [4]. - The fund's holdings typically encompass U.S. government securities, investment-grade corporate debt, below-investment-grade debt, floating-rate loans, and securities from foreign issuers, including emerging markets [5]. Group 4: Portfolio Composition and Performance - As of October 31, FTBD's allocation is over 50% in government debt and 40% in corporate debt, which shows stronger fundamentals and a mix of yield while mitigating credit risk [6]. - The fund also includes fixed income exposure in Europe (7.55% allocation) and Latin America (6.26%), with an expense ratio of 55 basis points and a 30-day SEC yield of 4.72% as of November 6 [6].