Fidelity Sustainable Low Duration Bond ETF (FSLD)

Fidelity Sustainable Low Duration Bond ETF (FSD)

Profile

FSD is an actively-managed ETF that invests primarily in short-term investment-grade U.S. fixed-income securities. It focuses on sustainable investments with an emphasis on environmental and social impact, excluding companies involved in controversial activities like tobacco, weapons, and fossil fuels.

Objective

The primary investment goal of FSD is to provide income consistent with the preservation of capital and to support sustainable investing practices.

Issuer

Company: Fidelity Investments Reputation and Reliability: Fidelity Investments is a highly reputable and reliable firm with a long history in the financial services industry. It is the second-largest asset manager globally. Management: The portfolio managers of FSD have extensive experience in fixed-income investing and sustainable investing practices.

Market Share

FSD holds a market share of approximately 0.2% in the sustainable short-term bond ETF category.

Total Net Assets

As of November 10, 2023, FSD has total net assets of approximately $881 million.

Moat

FSD's competitive advantages include:

• Actively managed approach: This allows the managers to pursue opportunities and mitigate risks in the dynamic fixed-income market.
• Focus on sustainability: FSD caters to investors seeking to align their investments with environmental and social values.
• Low duration: The short-term focus helps reduce interest rate risk.

Financial Performance

• Year-to-date performance (as of November 10, 2023): -3.12%
• One-year performance: -6.79%
• Three-year performance: 2.71%

Benchmark Comparison: FSD has underperformed its benchmark, the Bloomberg Barclays U.S. Short Term Government/Credit Bond Index, in recent years.

Growth Trajectory

Short-term fixed-income ETFs like FSD are expected to see moderate growth as investors seek stability and income in a volatile market. However, the growth will primarily depend on interest rate fluctuations and economic conditions.

Liquidity

• Average Daily Trading Volume: Approximately 24,000 shares
• Bid-Ask Spread: 0.02%

Market Dynamics

Factors affecting FSD's market environment include:

• Interest rate changes: Rising interest rates can negatively impact bond prices.
• Economic conditions: A strong economy can lead to higher interest rates and decreased demand for bonds.
• Investor sentiment: Increased risk aversion can lead to lower demand for fixed-income investments.

Competitors

• Schwab Short-Term U.S. Treasury ETF (SCHO): Market share - 3.5%
• iShares Aaa - A Rated Corporate Bond ETF (QLTA): Market share - 2.8%
• Vanguard Short-Term Treasury ETF (VGSH): Market share - 2.5%

Expense Ratio

FSD has an expense ratio of 0.35%.

Investment Approach and Strategy

• Strategy: Actively managed, focusing on short-term investment-grade U.S. bonds with a sustainable focus.
• Composition: Primarily holds U.S. government and corporate bonds with maturities of less than three years.

Key Points

• Actively managed, seeking to outperform the benchmark.
• Sustainable investment approach.
• Low duration for reduced interest rate risk.
• Moderate liquidity.

Risks

• Market risk: Bond prices can decline due to interest rate increases, economic downturns, or other factors.
• Credit risk: The issuer of a bond may default on its debt obligations.
• Liquidity risk: The ETF may be difficult to buy or sell quickly at a fair price, especially in times of market stress.

Who Should Consider Investing

FSD is suitable for investors seeking:

• Income generation: The ETF provides regular interest payments.
• Capital preservation: The short-term focus helps mitigate interest rate risk.
• Sustainable investing: The ETF aligns investments with environmental and social values.
• Moderate risk tolerance: While bonds are generally considered less volatile than stocks, there are still risks involved.

Fundamental Rating Based on AI

Based on the analysis of various factors like financial health, market position, and future prospects, FSD receives a Fundamental Rating of 7.5 out of 10. The strong track record of Fidelity Investments, the focus on sustainability, and the low duration strategy are positive factors. However, the underperformance compared to the benchmark and the relatively small market share are drawbacks.

Resources and Disclaimers

• Fidelity Sustainable Low Duration Bond ETF website: https://www.fidelity.com/etfs/etf-investment-strategist/etf-detail/FSD
• Bloomberg Terminal: https://www.bloomberg.com/professional/product/bloomberg-terminal/
• Morningstar: https://www.morningstar.com/etfs/best-short-term-bond-etfs

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.