7 of the Best Fidelity Bond Funds to Buy for Steady Income

Once again visiting that topic of investing for income, here are the latest picks from U.S. News Invested.  

OCTOBER 25, 2023 Invested Advice, rankings and stock market news for investors.

Good morning, investors. Stocks rise after the latest earnings reports, and Bitcoin gets a bump on ETF buzz. Highlights of today's newsletter include our market insights plus these new articles: 7 of the Best Fidelity Bond Funds to Buy for Steady Income The 10 Most Valuable Companies in the World by Market Cap 8 Top Nancy Pelosi Stocks to Buy 7 Best Metaverse Stocks to Buy Now TODAY'S FEATURED STORY 7 of the Best Fidelity Bond Funds to Buy for Steady Income Income investors often turn to assets like dividend stocks and real estate investment trusts, or REITs, for their needs. However, these assets come with their own set of equity-specific risks. To address both the consistency in income and the frequency of distributions, investors can instead turn to bond mutual funds and exchange-traded funds, or ETFs. Here are seven of the best income-oriented Fidelity funds to buy in 2023: Fidelity High Yield Factor ETF (ticker: FDHY). "Generally speaking, higher income comes at greater credit risk because investors need to be compensated for the additional credit-risk premium over comparable Treasury bonds, which are risk-free in terms of default," says Mark Andraos, associate portfolio manager at Regency Wealth Management. The riskiest bonds are known as "high yield" or "junk" bonds and have a greater probability of default. For exposure to high-yield bonds, investors can buy FDHY, which primarily invests in non-investment grade debt. FDHY's portfolio currently consists of 338 total bond issues, with some paying coupons as high as 11.6%, such as one issue from Royal Caribbean Group Ltd. (RCL). The ETF pays an overall 30-day SEC yield of 8.2% and charges a 0.45% expense ratio. Fidelity Corporate Bond Fund (FCBFX). Between high-yield bonds and Treasurys sit the majority of investment-grade corporate bonds. These bonds are rated BBB or higher from one or more of the three major credit rating agencies and offer a balanced blend of credit risk and income potential. Because trading individual corporate bond issues can be illiquid, investors may find it easier to access them through a fund like FCBFX. Around 59% of FCBFX is invested in corporate-issued bonds rated BBB, with the next highest being A-rated issues at 25%. The fund is globally diversified, albeit with a bias toward U.S. issuers at 74% of its portfolio. At present, the fund is paying out a 30-day SEC yield of 6.2% against a 0.44% expense ratio. Like many Fidelity mutual funds, FCBFX has no transaction fees or minimum investment requirements. Click here to continue reading.   BOND FUND EXPENSE RATIO 30-DAY SEC YIELD AS OF OCT. 20 Fidelity High Yield Factor ETF (ticker: FDHY) 0.45% 8.2% Fidelity Corporate Bond Fund (FCBFX) 0.44% 6.2% Fidelity Corporate Bond ETF (FCOR) 0.36% 6.1% Fidelity Short Duration High Income Fund (FSAHX) 0.75% 8.1% Fidelity Floating Rate High Income Fund (FFRHX) 0.68% 9.2% Fidelity Municipal Core Plus Bond Fund (FMBAX) 0.37% 4.2% Fidelity Sustainable High Yield ETF (FSYD) 0.55% 9%