Podcast Center
Video Center
Webcasts
Resource Center
Events
June 03, 2005 at 08:00 PM
Expenses are falling on bond funds at Fidelity Investments. The company has lowered expenses on 12 of its taxable, investment-grade bond funds, to 0.45 %. Expenses for those retail funds were previously in the 0.50 % to 0.65 % range. Even better news for advisors is that Fidelity has cut expenses and dropped management fees by 10 basis points, for its eight Advisor Funds and Variable Insurance Product taxable investment-grade bond portfolio.
In conjunction with the announcement, Fidelity released a white paper, “The Case for Investing in Fixed Income,” which gives historical perspective about using bonds or bond funds to diversify an investor’s equity portfolio. “The proof points in the white paper are very compelling, and show why investment advisors ought to consider the diversified approach we have outlined,” said Lynne Goldman, SVP of investment product management at Fidelity.
The paper makes a persuasive argument for keeping bonds in a portfolio over the long term, across economic cycles, rather than timing the bond market. One particularly useful graphic, (Exhibit 3, below), shows how the low correlation between stock market and bond market performance, along with income generated by bonds, can lower a portfolio’s volatility and soften the effects of stock market declines.
Fidelity Retail Bond Funds
Expense Changes/Asset Levels
6/1/05
| Former Fund Expense |
New Fund Expense |
Lipper Category Average Expense |
Total Net Assets ($B) |
SEC 30-Day Yield |
1-Year AATR |
3-Year AATR |
5-Year AATR |
10-Year AATR |
|
| Fund |
Prior to June 1, 2005 |
Beginning June 1, 2005 |
as of 4/30/2005 |
as of 5/31/2005 |
as of 5/31/2005 |
as of 5/31/2005 |
as of 5/31/2005 |
as of 5/31/2005 |
as of 5/31/2005 |
| Total Bond Fund |
0.65% |
0.45% |
1.00% |
$0.4 |
$3.75 |
$7.54 |
– |
– |
– |
| Mortgage Securities |
0.62% |
0.45% |
1.05% |
$1.8 |
$3.47 |
$6.16 |
$4.98 |
$7.16 |
$6.65 |
| Ginnie Mae |
0.61% |
0.45% |
1.05% |
$4.1 |
$3.88 |
$6.00 |
$4.42 |
$6.49 |
$6.19 |
| Government Income |
0.61% |
0.45% |
1.26% |
$5.0 |
$3.18 |
$6.13 |
$5.32 |
$7.05 |
$6.16 |
| Intermediate Bond |
0.61% |
0.45% |
1.01% |
$7.3 |
$3.57 |
$4.78 |
$5.25 |
$7.09 |
$6.18 |
| Intermediate Govt Income |
0.61% |
0.45% |
1.08% |
$0.9 |
$3.31 |
$3.97 |
$4.26 |
$6.36 |
$5.95 |
| Investment Grade Bond |
0.61% |
0.45% |
1.00% |
$6.9 |
$3.57 |
$6.87 |
$6.04 |
$7.64 |
$6.49 |
| Short-Term Bond |
0.56% |
0.45% |
0.93% |
$4.9 |
$3.51 |
$2.64 |
$3.67 |
$5.32 |
$5.31 |
| Ultra-Short Bond |
0.55% |
0.45% |
0.77% |
$0.9 |
$2.97 |
$1.92 |
– |
– |
– |
| Inflation-Protected Bond |
0.50% |
0.45% |
0.95% |
$1.6 |
$0.99 |
$8.87 |
– |
– |
– |
| Spartan Govt. Income |
0.50% |
0.45% |
1.26% |
$0.9 |
$3.42 |
$6.33 |
$5.64 |
$7.33 |
$6.49 |
| Spartan Inv. Grade Bond |
0.50% |
0.45% |
1.00% |
$2.6 |
$3.74 |
$7.14 |
$6.29 |
$7.95 |
$6.82 |
Returns are historical and include changes in share price, reinvestment of dividends and capital gains.
Bond funds must quote the 30 day SEC yield, 1, 5, 10 year or Life of Fund average annual, load/fee adjusted total returns when quoting any performance.
Share price and returns will vary and you may have a gain or loss when shares are sold.
Past performance is not a guarantee of future results.
The fund’s yield reflects that a portion of the fund’s income was subject to state taxes.
All funds with a 30 day SEC Yield must disclose the Unit Value and 30 day SEC yield together as a unit.
Bond and Equity funds must quote a 1, 5, 10 or Life of Fund average annual load/fee
adjusted return as of the most recent calendar quarter if quoting the 30 day yield, tax equivalent yield, or any performance data.
All numbers are unaudited.
