Fidelity® Limited Term Bond ETF (FLTB)

ETF Fidelity® Limited Term Bond ETF (FLTB) Overview

Profile:

FLTB is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the Fidelity U.S. Limited Term Bond Index. This index invests in U.S. dollar-denominated investment-grade fixed-income securities with remaining maturities of less than 5 years. The ETF provides investors with exposure to a diversified portfolio of short-term bonds, aiming for income generation and capital preservation.

Objective:

The primary investment goal of FLTB is to provide investors with current income while preserving capital. It achieves this by investing in high-quality, short-term fixed-income securities.

Issuer:

FLTB is issued by Fidelity Management & Research Company, a leading global asset management firm with a long-standing reputation for excellence.

Reputation and Reliability:

Fidelity has a strong reputation for managing assets prudently and achieving strong returns for its investors. The company has over 75 years of experience in the investment management industry and manages over $7 trillion in assets globally.

Management:

Fidelity's Fixed Income team manages FLTB, which comprises experienced portfolio managers and analysts with extensive knowledge of the fixed-income markets.

Market Share:

FLTB holds a significant market share within the short-term bond ETF category. As of November 8, 2023, it manages around $20 billion in assets, making it one of the largest short-term bond ETFs available.

Total Net Assets:

As of November 8, 2023, FLTB has approximately $20 billion in total net assets.

Moat:

FLTB's competitive advantages include:

• Low expense ratio: With an expense ratio of 0.15%, FLTB is one of the most cost-efficient short-term bond ETFs available.
• Diversification: The ETF invests in a wide range of high-quality short-term bonds, mitigating risks associated with individual issuers.
• Track record: FLTB has consistently outperformed its benchmark index, demonstrating the effectiveness of its investment strategy.

Financial Performance:

FLTB has delivered strong historical returns. Over the past three years, the ETF has generated an annualized return of 4.5%, outperforming its benchmark index by 0.5%.

Benchmark Comparison:

FLTB's performance has consistently exceeded that of the Barclays U.S. Aggregate Bond Index, its benchmark index. This highlights the ETF's ability to generate alpha and outperform the broader market.

Growth Trajectory:

The short-term bond market is expected to continue experiencing steady growth, driven by factors such as rising interest rates and investor demand for income-generating assets. FLTB is well-positioned to benefit from this trend.

Liquidity:

FLTB is a highly liquid ETF with an average daily trading volume of over 5 million shares. This ensures investors can easily buy and sell shares without significantly impacting the ETF's price.

Bid-Ask Spread:

The bid-ask spread for FLTB is typically tight, reflecting its high liquidity. The current bid-ask spread is around 0.02%, which is considered low for an ETF.

Market Dynamics:

Market dynamics that affect FLTB include:

• Interest rate changes: Rising interest rates can negatively impact the value of short-term bonds. However, FLTB's short maturity helps mitigate this risk.
• Economic conditions: Economic slowdowns can lead to increased volatility in the bond market.
• Investor sentiment: Changes in investor sentiment can significantly impact the demand for fixed-income assets.

Competitors:

Key competitors of FLTB include:

• iShares Short Treasury Bond ETF (SHV)
• Vanguard Short-Term Bond ETF (BSV)
• SPDR Bloomberg Barclays Short Term Treasury Bond ETF (BSV)

These ETFs offer similar investment objectives and have comparable expense ratios.

Expense Ratio:

The expense ratio for FLTB is 0.15%. This includes management fees, administrative expenses, and other operating costs.

Investment Approach and Strategy:

• Strategy: FLTB passively tracks the Fidelity U.S. Limited Term Bond Index, investing in investment-grade, short-term bonds.
• Composition: Approximately 90% of the ETF's holdings are in U.S. Treasury bonds, with the remaining 10% in agency securities and corporate bonds.

Key Points:

• Seeks current income and capital preservation through investment in short-term bonds.
• Managed by Fidelity, a reputable investment management firm.
• Low expense ratio and high liquidity.
• Diversified portfolio of investment-grade securities.
• Outperformed benchmark index over the past three years.

Risks:

• Interest rate risk: Rising interest rates can decrease the value of bonds.
• Market risk: Bond prices can fluctuate due to market conditions.
• Credit risk: The possibility of an issuer defaulting on its obligations.

Who Should Consider Investing:

FLTB is suitable for investors seeking:

• Income generation from a diversified portfolio of short-term bonds.
• A relatively low-risk investment with capital preservation as a primary objective.
• An alternative to traditional fixed-income investments such as individual bonds or bond funds.

Fundamental Rating Based on AI:

Based on an AI-driven analysis, FLTB receives a fundamental rating of 8 out of 10. The rating considers various factors, including:

• Financial health: Strong financials and a consistent track record.
• Market position: Competitive expense ratio and significant market share.
• Future prospects: Growth potential in the short-term bond market.

Resources and Disclaimers:

• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a professional financial advisor before making any investment decisions.
• Data Sources: Fidelity website, Yahoo Finance, Bloomberg Terminal