On Thursday, June 17, Fidelity Investments launched a new active bond ETF, the Fidelity Preferred Securities & Income ETF (FPFD). FPFD is the first preferred securities product from Fidelity.
Preferred securities are hybrid securities that share characteristics of both stocks and bonds. They are debt instruments that are perpetual yet callable; that pay dividends rather than coupons; and which rank higher in the capital structure than common stock. Preferreds may also offer attractive yields compared to either investment grade bonds or equity securities.
FPFD seeks high total return via both current income and capital appreciation. The fund will invest at least 80% of its assets in preferred securities and other income-generating securities that carry at least a BB rating by S&P, Moody’s, or some other nationally recognized credit agency.
The fund is managed by Adam Kramer and Brian Chang, who between them have fifteen years managing preferred securities within multi-asset class strategies.
The managers will rely primarily on fundamental research to identify and select preferred securities that may offer the most attractive return potential.
With this launch, Fidelity now offers 42 ETFs, totaling more than $29 billion in assets under management. Yesterday, Fidelity added two new ESG ETFs to its line-up, including the Fidelity Sustainability U.S. Equity ETF (FSST) and the Fidelity Women’s Leadership ETF (FDWM).
In that lineup, Fidelity offers several other active bond ETFs, including the Fidelity Total Bond ETF (FBND); the Fidelity Limited Term Bond ETF (FLTB); the Fidelity Corporate Bond ETF (FCOR); the Fidelity Investment Grade Bond ETF (FIGB); and the Fidelity Investment Grade Securitized ETF (FSEC).
“Investors continue to look for a range of fixed income solutions across duration and credit spectrums, and we remain committed to using our significant global investment management capabilities and scale to offer choice and value in this space,” Greg Friedman, Fidelity’s Head of ETF Management and Strategy, said in the press release announcing the launch.
FPFD, which trades on Cboe, has an expense ratio of 0.59%.
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