Fidelity Limited Term Bond ETF

FLTB

Market cap $270M

For the most part, financial advisors will tell their clients that it's better to stay invested than to let cash sit idle. One way to consider staying invested is through short-term bond funds — and Fidelity has a trio of ETFs that are worth considering just for this purpose.

U.S. investment-grade bonds gained 1.21% in Q2, driven by volatility from trade and fiscal policy uncertainty, but stabilized as inflation and employment data improved. Intermediate-term bonds and BBB-rated credits outperformed, while high-yield and emerging-market bonds saw the strongest gains as risk appetite increased late in the quarter. The ETF's sector allocation and security selection in financials and industrials contributed positively versus its benchmark, with an underweight to Treasurys and focus on corporate credit.

Investors shifting their focus to long-duration bonds may be overlooking a compelling opportunity in ultra-short and short-duration bonds. In the current economic environment, many investors are naturally drawn to the allure of long-duration bonds.

In the current environment, characterized by heightened volatility, now is the time to focus on greater portfolio diversification. The diversifying power of bonds has waned, underscored by bonds' correlation with equities during the recent market sell-off.

Active ETFs have seen widespread adoption, particularly within the fixed income space. By the end of 2024, 40% of advisors had allocations to active ETFs, compared to just 13% in 2022, according to data from Fidelity as of December 31, 2024.

Many investors are still sitting on the sidelines in cash, potentially missing out on the short duration fixed income segment. Importantly, investors sitting in cash via money market funds have earned a compelling rate without taking on much risk.

The second half of 2024 appears increasingly favorable for actively managed bond ETFs. Michael Plage, CFA, portfolio manager at Fidelity Investments, talked active fixed income investing in the Third Quarter Fixed Income Symposium hosted on the VettaFi platform.

Many investors have been keeping money on the sidelines or utilizing money market funds due to high money market rates. This strategy may prove less effective when the Federal Reserve begins cutting rates, opening up avenues for short duration bond funds.

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research Todd Rosenbluth discussed the Fidelity Limited Term Bond ETF (FLTB) with Chuck Jaffe of “Money Life.” The pair talked about several topics regarding the fund to give investors a deeper understanding of the ETF overall.

VettaFi's Head of Research Todd Rosenbluth discussed the Fidelity Limited Term Bond ETF (FLTB) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis, visit VettaFi | ETF Trends.