Fidelity’s New Suite of Models for Financial Advisors Includes Four Fixed Income Strategies Using Mutual Funds and ETFs
New Model Portfolios Further Extend Fidelity’s Commitment to Bundle Its Asset Management Capabilities in New and Innovative Ways to Meet the Growing Demand for Outcome-oriented Solutions
BOSTON, January 15, 2020 —Fidelity Investments®, one of the largest and most diversified global financial services firms with $8.2 trillion in client assetsi , today launched a suite of bond model portfolios for financial advisors — Fidelity Short Multi-Sector Bond Model Portfolio, Fidelity Core Bond Model Portfolio, Fidelity Core Plus Bond Model Portfolio, and Fidelity Dynamic Bond Model Portfolio. The new model portfolios are designed to maximize risk-adjusted total return as well as accommodate a range of risk preferences, including duration and credit risk. Fidelity offers a full range of asset management capabilities – from portfolio construction to mutual funds and ETFs to models and SMAs – that help advisors meet their clients’ specific needs.
Fidelity’s new offering significantly expands the company’s lineup of model portfolios, which includes suites focused on core diversification, income generation, equity exposure and the application of the business cycle. They also supplement Fidelity’s Bond Income Model Portfolio, launched in 2019, which aims to maximize risk-adjusted yield.
“Think of model portfolios as a recipe — they can serve as a starting point for advisors but allow for a level of customization based on their clients’ needs,” said Matt Goulet, senior vice president, Fidelity Institutional Asset Management. “We’re excited to offer bond model portfolios with a range of risk profiles for advisors who are looking for strategies that can serve as — or complement — the fixed income allocations in their clients’ portfolios.”
The demand for model portfolios continues to grow among advisors. According to Cerulli, 95% of advisors say they always or sometimes use asset allocation models for specific strategies or objectives.ii Fidelity’s four new strategies, which are made up using Fidelity mutual funds and ETFs, in addition to third-party ETFs such as BlackRock iShares, seek diversified fixed income exposure:
• Fidelity Short Multi-Sector Bond Model Portfolio is designed to provide a lower duration bond portfolio with a focus on investment grade mutual funds/ETFs complemented by a limited allocation to non-investment grade.
• Fidelity Core Bond Model Portfolio is designed to provide a core bond portfolio focused on a diversified allocation to investment grade mutual funds/ETFs.
• Fidelity Core Plus Bond Model Portfolio is designed to provide a diversified bond portfolio with a focus on investment grade mutual funds/ETFs complemented by a limited allocation to non-investment grade.
• Fidelity Dynamic Bond Model Portfolio is designed to provide a diversified bond portfolio of fixed income mutual funds/ETFs while offering greater investment flexibility through duration and credit allocation.
Commitment to Choice
Advisors want an efficient way to implement model portfolios and manage individual clients’ accounts, and Fidelity provides advisors with a range of options. Fidelity Model Portfolios are now available through leading turnkey platforms, including Fidelity’s Managed Account Solutions, Envestnet, Morningstar® Model Marketplace, GeoWealth, and the Riskalyze Partner Store. More than 100 advisory firms access the models through these platforms. In addition, many advisors choose to receive model updates directly from Fidelity, where they can subscribe to receive email updates with model reallocation rationales, market and model performance commentaries, and investing insights from Fidelity.
This expanded offering also reflects the scale, depth and breadth of Fidelity’s asset management organization, which delivers investment management capabilities across asset classes, such as equity, fixed, high income, and alternatives; investment approaches, utilizing active, passive, or blended strategies; and investment vehicles including mutual funds, ETFs, CITs, model portfolios, and the recently launched Fidelity Advisor SMAs
Fidelity Model Portfolios are available to advisors at broker-dealers, registered investment advisors, banks and insurance companies. For more information, please visit go.fidelity.com/models.
Expansion of Portfolio Construction Capabilities
The models broaden Fidelity’s lineup of portfolio construction capabilities for advisors in the fixed income space. Last year, Fidelity launched the Fixed Income Portfolio Review diagnostic tool, which uses comprehensive holdings-level data to help advisors and investors understand their bond allocations and make informed decisions about their fixed income positioning in the context of their overall portfolio. In addition, advisors have access to Fidelity’s insights from its Capital Markets Strategy team, a robust thought leadership program on portfolio construction, portfolio evaluations with the Fidelity Portfolio Quick Check diagnostic tool and consultation from the Portfolio Construction Guidance team.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $8.2 trillion, including discretionary assets of $3.1 trillion as of November 30, 2019, we focus on meeting the unique needs of a diverse set of customers: helping more than 30 million people invest their own life savings, 22,000 businesses manage employee benefit programs, as well as providing more than 13,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for more than 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
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This document does not make an offer or solicitation to buy or sell any securities or services and is not investment advice. FIAM does not provide legal or tax advice and we encourage you to consult your own lawyer, accountant or other advisor before making an investment. Information provided in this document is for informational and educational purposes only.
To the extent any investment information in this material is deemed to be a recommendation. It is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.
The Fidelity Target Allocation Models, Fidelity Business Cycle Models, Fidelity U.S. Equity Factor Models, Fidelity Income Models, and Fidelity Bond Models (collectively, the "Fidelity Model Portfolios" or the "Models") are made available to financial intermediaries on a non-discretionary basis by FIAM LLC, a registered investment adviser or by Fidelity Distributors Company LLC ("FDC LLC"), a registered broker-dealer, (collectively "FIAM"). The information presented herein is for discussion and illustrative purposes only and is not investment, legal or tax advice, nor an offer or a solicitation to buy or sell any securities or services. FIAM is not acting as a fiduciary or in any advisory capacity in providing this information. The information is designed to be utilized by your investment advisor solely as a resource, along with other potential sources, in providing you their advisory services to you. Your investment advisor is solely responsible for determining whether the Models, the investment products included in the Models, and the share class of those products, are appropriate and suitable to base a recommendation or provide advice to any end investor about the potential use of the Models.
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The information presented herein is for discussion and illustrative purposes only and is not investment, legal or tax advice, nor an offer or a solicitation to buy or sell any securities or services.
With the exception of the Fidelity Target Allocation Models which consists solely of Fidelity mutual funds, the Models may consist of Fidelity mutual funds, Fidelity ETFs, third-party ETFs, and iShares ETFs sponsored by BlackRock. These investment products that comprise the models are available only in the share class designated by FIAM when made available through the Models. FIAM does not seek to offer investment products or share classes through the Models that are necessarily the least expensive. In some cases, the investment products in the Models may have a lower cost share class available on a stand-alone basis for purchase outside of the Models, or that may be available to other types of investors. Use of the Models will result in the payment of fees to the Fidelity funds and Fidelity ETFs in the Models as provided for in the prospectus to each such investment product. The fees received from investment in the funds and ETFs will be shared by various affiliates, including FIAM, involved in distributing and advising the Models, the Fidelity funds, and the Fidelity ETFs in the Models. FIAM does not have investment discretion and does not place trade orders for any of your clients' accounts. Information and other marketing materials provided to you by FIAM concerning the Models may not be indicative of your client's actual experience from investing in one or more of the investment products included in the Models. The Models' allocations and data are subject to change.
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Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation, credit, and default risks for both issuers and counterparties.
Strategy insights, and portfolio construction capabilities including, Portfolio Quick Check and Portfolio Construction Guidance, are provided to advisors by Fidelity Distributors Company LLC, a registered broker/dealer that is affiliated with FIAM LLC.
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i As of November 30, 2019
ii Cerulli, “U.S. Product Development 2019,” October 2019