Fidelity Mutual Funds: Investing In Corporate Debt

Corporate bond mutual funds are an investment option for those looking to access fixed-income securities without the time investment and transaction costs of buying individual bonds. Fidelity, a world leader in mutual funds, offers a range of investment options, including the Fidelity Corporate Bond Fund (FCBFX), which invests primarily in investment-grade foreign and domestic corporate bonds. With over 70 years in the business, Fidelity has the tools and experience to help investors build an investment strategy that matches their style.

Fidelity's Corporate Bond Fund (FCBFX) is a strong choice for investors seeking exposure to investment-grade corporate bonds, with the fund investing more than 80% of its assets in this area. The fund also has a four-star Morningstar rating and a 0.45% expense ratio, making it a solid option for those looking to balance risk and return.

In addition to the Corporate Bond Fund, Fidelity offers a diverse range of mutual fund options, including the Fidelity Total Bond Fund, which was recognised by Forbes as one of the best Fidelity Mutual Funds of September 2024. With its zero management fees and strong performance, the Fidelity ZERO Large Cap Index Fund is another notable option for investors.

Whether you're an active trader or planning for the future, Fidelity has a range of mutual fund options to suit your needs.

The Fidelity Corporate Bond Fund (FCBFX)

As of May 31, 2020, FCBFX held a four-star rating from Morningstar, with a 0.45% expense ratio and a 14.46% year-to-date (YTD) return in 2019. The fund's top holdings include issuances from well-known companies such as Morgan Stanley, Verizon, and Bank of America.

The fund typically invests more than 80% of its assets in corporate bonds, with the remaining assets allocated to government bonds and cash. This diversification helps balance the portfolio and manage risk. The fund's effective duration of 6.96 years, as of September 23, 2024, further contributes to its interest rate risk management.

FCBFX is suitable for investors seeking exposure to investment-grade corporate bonds while minimising interest rate risk. The fund's strong performance, low expense ratio, and experienced management team make it a compelling choice for those looking to add corporate bond exposure to their investment portfolio.

Fidelity, with its extensive resources and global research capabilities, provides investors with a wide range of mutual fund options to meet diverse investment goals. The Corporate Bond Fund (FCBFX) is just one example of how Fidelity offers funds that cater to specific investment objectives, such as corporate debt investments.

The Calvert Long-Term Income Fund Class A (CLDAX)

As of April 30, 2020, CLDAX had a two-star rating from Morningstar, with a 0.92% expense ratio and a 20.76% YTD return for 2019. The fund has a relatively high concentration of corporate bonds, with approximately 81% of its allocation invested in this asset class. The remaining assets are spread across U.S. government bonds (8.3%), securitized obligations (4%), and some cash and municipal bond holdings. Notably, nearly 16% of the fund's assets are invested in a single U.S. government bond maturing in 2045.

CLDAX is suitable for investors who want to hold U.S. government bonds to mitigate default risk. The fund's performance objective and investment process are clearly defined and repeatable, contributing to its Morningstar Medalist Rating of Neutral. However, fees are a weakness, with the strategy's lofty fees being a high hurdle to clear.

The fund's top five holdings as of July 31, 2024, include the Msilf Government Portfolio, Federal National Mortgage Association, United States Treasury Bills, and United States Treasury Notes. The credit quality of CLDAX is rated as high, with interest rate sensitivity rated as moderate. The minimum initial investment for CLDAX is $1,000, and it falls under the Intermediate Core Bond category.

The Delaware Extended Duration Bond Fund Class C (DEECX)

DEECX's strategy involves investing at least 80% of its net assets in long-duration corporate bonds, with the remaining allocated to government and municipal bonds. The fund's holdings are rated BBB- and above by Standard & Poor's or Baa3 and above by Moody's, indicating investment-grade quality. As of April 30, 2020, DEECX held 182 securities, including corporate bonds issued by prominent companies such as JPMorgan Chase, Pepsico, and Duke Energy.

The fund has a longer-than-average duration of 13.4 years, making it sensitive to changes in market interest rates. This sensitivity contributes to interest rate risk and volatility. As of April 30, 2020, DEECX had a two-star rating from Morningstar, a 1.57% expense ratio, and a 2019 year-to-date return of 21.76%.

DEECX is well-suited for investors seeking exposure to highly-rated corporate bonds who are comfortable with the associated interest rate risk and volatility. It provides a convenient way to access fixed-income securities without the time commitment and transaction costs of investing directly in individual bonds.

Fidelity, a world leader in mutual funds, offers a diverse range of investment options, including the Fidelity Corporate Bond Fund (FCBFX), which primarily invests in investment-grade foreign and domestic corporate bonds. With its extensive resources and global research capabilities, Fidelity enables investors to build investment strategies that align with their goals and preferences.

The Federated Bond Fund Class F Shares (ISHIX)

ISHIX allocates its portfolio between high-yield bonds (24%) and investment-grade bonds (75%). The fund's exposure to speculative-grade bonds means its returns are subject to greater default risk, but it also has the potential to outperform its peers under favourable market conditions. As of May 5, 2020, ISHIX had a three-star rating from Morningstar, along with a 0.86% expense ratio and a 13.85% YTD return.

The fund is suitable for investors seeking exposure to a mix of investment-grade and speculative bonds, which have the potential to generate high returns when market conditions are favourable for bonds. ISHIX provides a convenient way to access fixed-income securities without incurring the transaction costs of buying individual bonds.

The Lord Abbett Income A (LAGVX)

The fund allocates around 68% of its holdings to corporate bonds, with an emphasis on the lower range of the investment-grade spectrum, and about 15% to securitized fixed-income instruments. The investment team focuses on corporate bonds, diversified with select mortgage, high-yield, and non-U.S. securities to provide an attractive total return opportunity. The fund's strategy employs both quantitative and fundamental research to drive sector rotation and security selection.

Lord Abbett Income A (LAGVX) is suitable for investors who want to diversify their portfolios with high-yield bonds that focus on investment-grade issues, with BBB credit quality ratings. The fund's performance, as quoted, is not indicative of future results, and there is no assurance of future returns.

Lord, Abbett & Co. LLC is a privately-held investment management company with offices in multiple locations globally, including Jersey City, Dubai, Dublin, London, Montevideo, Singapore, Tokyo, and Zurich. As of June 30, 2024, the company managed approximately $202 billion in assets across a diverse range of investment offerings.

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