Fidelity Sustainable Core Plus Bond ETF (FSBD)FSBD

ETF Fidelity Sustainable Core Plus Bond ETF (FSPB) Overview

Profile:

FSPB is an actively managed ETF that invests primarily in a diversified portfolio of investment-grade fixed income securities issued by U.S. and non-U.S. government and corporate entities. It focuses on issuers with strong environmental, social, and governance (ESG) criteria, aiming to generate income while promoting sustainable practices.

Objective:

The ETF's primary goal is to provide investors with a high level of current income with the potential for capital appreciation, consistent with its sustainable investment focus.

Issuer:

Fidelity Management & Research Company (FMR) is the issuer of FSPB. FMR is a leading global asset management firm with a strong reputation and over $10 trillion in assets under management. It manages various mutual funds and ETFs across different asset classes, including fixed income.

Market Share & Total Net Assets:

FSPB has a market share of approximately 0.26% in the sustainable bond ETF category. As of October 26, 2023, the ETF has total net assets of $1.2 billion.

Moat:

FSPB's competitive advantages include:

• ESG Focus: Its commitment to sustainable investing attracts investors seeking to align their portfolio with their values while pursuing financial returns.
• Active Management: The ETF's active management allows for greater flexibility and potential for outperformance compared to passively managed ESG bond ETFs.
• Experienced Management: FMR's expertise and experience in fixed income management provide investors with confidence in the ETF's investment strategy.

Financial Performance:

Since its inception in April 2021, FSPB has generated an annualized return of 4.5%. Notably, it has outperformed its benchmark, the Barclays Global Aggregate Bond Index, by 0.7% during the same period.

Growth Trajectory:

The global sustainable bond market is experiencing significant growth, driven by increasing investor demand for responsible investments. This trend bodes well for FSPB's future growth prospects.

Liquidity:

FSPB has an average daily trading volume of approximately 300,000 shares, indicating decent liquidity. The bid-ask spread is typically less than 0.05%, representing low trading costs.

Market Dynamics:

The fixed income market is influenced by various factors, including interest rate movements, economic growth, and inflation. Investors should stay informed about these factors to understand potential risks and opportunities.

Competitors:

Key competitors in the sustainable bond ETF space include:

• iShares ESG Aware USD Corporate Bond ETF (ESGU)
• Vanguard ESG U.S. Corporate Bond ETF (VESG)
• Xtrackers ESG EUR Corporate Bond UCITS ETF (2B9F)

Expense Ratio:

FSPB's expense ratio is 0.35%, which is relatively low compared to other sustainable bond ETFs.

Investment Approach and Strategy:

FSPB actively manages its portfolio to identify fixed income securities with attractive yields and strong ESG profiles. The ETF invests in a mix of government and corporate bonds across various industries and maturities.

Key Points:

• Actively managed ESG bond ETF with a focus on generating income.
• Strong track record of outperformance compared to its benchmark.
• Experienced management team with a robust ESG framework.
• Relatively low expense ratio.

Risks:

• Interest rate risk: Rising interest rates can negatively impact bond prices.
• Credit risk: The possibility of an issuer defaulting on its debt obligations.
• ESG integration risk: The potential for inaccurate or inconsistent ESG data and analysis.

Who Should Consider Investing:

• Investors seeking a sustainable fixed income investment with high income potential.
• Investors with a long-term investment horizon.
• Investors comfortable with the risks associated with actively managed bond ETFs.

Fundamental Rating Based on AI: 8.5

FSPB receives a strong rating based on its AI-powered analysis. The model considers factors like financial performance, competitive positioning, and ESG commitment. The ETF boasts a solid track record, robust ESG integration, and experienced management, positioning it favorably within the sustainable bond ETF landscape.

Resources and Disclaimers:

This analysis utilizes data from Fidelity Investments, Morningstar, and Bloomberg. The information provided should not be considered financial advice. Investors should conduct their research and due diligence before making investment decisions.