[This ETF Industry Perspective is sponsored by Fidelity.]
Bond funds can offer income, diversification and liquidity to a client portfolio—important features when investors are considering the right mix of assets for achieving their investment objectives.
This article describes how experienced managers of active bond mutual funds and active exchange-traded funds (ETFs), drawing on expert research and trading support, seek to add value by discovering attractive investment opportunities created by bond market inefficiencies.
Moreover, active bond fund managers can choose bonds from a broader “opportunity set” (i.e., range of potential investments) than a passive index fund can, and may employ other investing strategies that may contribute to improved overall performance.
These potential advantages exist in a variety of market environments, including periods of rising interest rates, volatility and changing credit environments. Learn how diversifying your product solutions and working with investment firms with deep resources may help advisors achieve their clients’ investment objectives.
In general, the bond market is volatile, and fixed-income securities carry interest rate risk. Fixed-income securities also carry inflation, credit and default risks for issuers and counterparties. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. Fidelity Investments Institutional Company, Inc.