Fidelity Limited Term Bond ETF Q1 2025 Review

2025-05-08 09:08:00 ET

Summary

• Historically, U.S. Treasury yields tend to drop when economic uncertainty rises – and uncertainty rose sharply during the three months.
• As stock and bond markets reacted, the overall trend was a reversal from the risk-on environment of Q4 to a risk-off mindset in Q1 of the new year.
• Among maturities, long-term bonds fared best amid declining rates. By credit quality, securities rated AA had a notable performance advantage over other investment-grade debt.

Investment Approach

• Fidelity® Limited Term Bond ETF is a shorter-duration investment-grade bond strategy, which is focused primarily on U.S. corporate credit.
• The fund's primary benchmark is the Bloomberg U.S. 1-5 Year Government/Credit Bond Index. However, given the fund's focus on credit, it also has a secondary, composite benchmark, which consists of 70% Bloomberg U.S. 1-5 Year Credit Bond Index, 20% Bloomberg U.S. 1-5 Year Government Bond Index and 10% ICE BofA 1-5 Year BB-B U.S. Cash Pay High Yield Constrained Index. The composition differed in periods prior to February 28, 2024.
• Utilizing a team-based investment process, the fund relies on experienced portfolio managers, research analysts and traders. We concentrate on areas where we believe we can repeatedly add value, including asset allocation, sector and security selection, and yield-curve positioning.
• Robust governance and risk management, consisting of extensive quantitative modeling, formal and informal portfolio reviews, and proprietary tools, support the identification of both opportunities and risks.

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