Although FBND makes for a natural competitor to BOND and passively managed ETFs such as the iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG) and the Vanguard Total Bond Market ETF (NYSEArca: BND), the timing issue should not be overstated.
Fidelity commenced analysis of a possible entry into the active ETF market in 2012 and filed plans with the Securities and Exchange Commission for the three ETFs launched today in the first and third quarters of 2013. It can take 12 to 18 months for active ETFs to clear SEC hurdles and go live. [Leaving One Bond ETF for Another]
FBND competing with some well-known rivals should not cloud the fact FLTB and FCOR are the first actively managed ETFs in their respective fixed income categories.
“Ram Subramanian, president of Fidelity Brokerage, told S&P Capital IQ that the active ETFs are part of the company’s efforts to give customers additional choices to build ETF portfolios. For example, we think investors who hold AGG, but want to have active management tweak duration in light of expected Fed policies may consider using FLTB,” said S&P Capital IQ.
The research firm typically starts rating ETFs within 90 days of launch, so it does not currently have ratings on the new Fidelity funds. FBND’s mutual fund counterpart is one of just four comparable mutual funds to carry the prestigious Morningstar gold rating.