Fidelity Investments is a well-established privately-held investment management company that specializes in providing wealth management and brokerage products. Fidelity has almost 70 years of experience managing investors' money, and has over $2.1 trillion mutual fund assets under management. Of the 504 total mutual funds that Fidelity manages, here are some of the best Fidelity bond funds.
Fidelity Capital & Income Fund (FAGIX)
The Fidelity Capital & Income Fund invests in non-investment-grade corporate bonds with some allocation to U.S. stocks. The fund selects its holdings based on strong and improving fundamentals and highly capable management. The fund invests over 70% of its assets in bonds, while the remainder is split between cash and stocks positions. The fund has an expense ratio of 0.69%, charges no load fees, and comes with no minimum investment requirement. As of March 21, 2020, its bond portfolio has an average duration of 3.79 years and a 30-day SEC yield of 3.61%.
The Fidelity Capital & Income Fund has earned an average annual 10-year return of 7.41%, outperforming most of its peers within the Morningstar fixed-income category. Due to its significant allocation to low-rated bonds, the fund is suitable for investors with a high-risk tolerance. The fund receives a consistent five-star overall rating from Morningstar.
Fidelity GNMA Fund (FGMNX)
The Fidelity GNMA Fund invests in Ginnie Mae's repurchase agreements, which represent fixed income securities guaranteed by a government agency. The fund boasts an experienced management team that vigilantly seeks out mispriced securities. About 85% of the fund's assets are invested in mortgage-backed securities (MBSs), with the remainder being spread between cash and U.S. government bonds.
As of March 21, 2020, the fund has an average duration of 1.5 years and a 30-day SEC yield of 2.23%. The Fidelity GNMA fund charges an expense ratio of 0.45%. For the past ten years, it has demonstrated an average annual return of 3.18%. Morningstar awarded the fund a three-star overall rating.
Fidelity Michigan Municipal Income Fund (FMHTX)
The Fidelity Michigan Municipal Income Fund invests in bonds issued by municipalities in Michigan, which immediately stands out among the larger umbrella-style investments of the other funds, but it makes a lot of sense as a holding. Almost all of the bonds held by the fund have a credit rating of A or above. Because earnings from its holdings are exempt from federal taxes, this fund is most appropriate for investors whose taxable income falls into high tax brackets, although not necessarily as a core holding.
The fund has a 30-day SEC yield is 1.08% but factoring in the tax gain, the yield sits at an adjusted 2.27%. It has shown an average annual return of 4.24% from 2010 to 2020, with an expense ratio standing at 0.48%, and has no minimum investment requirement.
Fidelity Corporate Bond Fund (FCBFX)
The Fidelity Corporate Bond Fund invests in a wide variety of corporate bonds issued predominantly by domestic corporations. Because corporate bonds tend to have higher default risk, these bonds produce higher returns for investors. The fund has large holdings of bonds issued by financial institutions such as JP Morgan Chase, Bank of America, Goldman Sachs and Royal Bank of Scotland.
The Fidelity Corporate Bond Fund is one of the best-performing corporate bond funds administered by Fidelity, and it has received a four-star overall rating from Morningstar. The average annual return for the past five years has been 4.99%. The fund has a net expense ratio of 0.45% and requires no minimum initial investment. It has a 30-day SEC yield of 2.17% and an average duration of 7.66 years.