Fidelity® Limited Duration Municipal StrategyA separately managed account that seeks to generate federally tax-exempt interest income while limiting risk to principal over a full market cycle. The average portfolio duration has a target between 2–3 years. |
Investment objective: Seeks to generate federally tax-exempt interest income, while working to limit risk to principal over a full market cycle.
Types of investments: Primarily A- or higher investment-grade1 municipal bonds at time of purchase.
Investment minimum: $350,0002
Eligible Registration Types: Taxable only
Gross annual advisory fee: 0.35% – 0.40%3 (varies based on total assets invested)
Fidelity Limited Duration Municipal Strategy provides you with an actively managed portfolio of investment grade municipal bonds. Unlike government or corporate bonds, the income from the municipal bonds is generally exempt from federal income tax. Depending upon your tax bracket, this key feature may make municipal bonds of particular interest to a tax sensitive investor.
Seeks income from high-quality municipal bonds
The Fidelity Limited Duration Municipal Strategy typically maintains a portfolio of investment-grade bonds that has an average credit rating of at least A- with 80% rated A- or better, with no bonds rated below BBB-, at the time of purchase. These high-quality bonds have historically had low default rates, with 10-year average cumulative rate of less than 0.10%4.
The strategy invests in a diverse mix of bonds issued by municipalities such as U.S. cities, counties, and states as well as non-profit and public organizations. The mix includes a range of sectors and varying maturities. A decline in one sector could hopefully be offset by a gain in another, which may help smooth out portfolio volatility.
Strives to balance income vs risk
Fidelity Limited Duration Municipal Strategy considers both income and price appreciation as potential sources of return and seeks bonds with a favorable risk/reward trade-off. Using a research-based approach, the investment management team strives to avoid bonds that will not compensate bond holders for their investment risk.
To also help manage risk, the strategy will seek to maintain an average duration5 similar to that of the Bloomberg Managed Money Short Term Index.6 This index is a 1–5 year municipal bond index which typically has an average duration of 2-3 years. In general, portfolios with shorter durations are less sensitive to changes in interest rates than portfolios with longer durations.
- Fully independent and proprietary research
- Leverage research across fixed income, high yield, and equity
- Analyze opportunities and risks using proprietary models and tools
- Invest in a broad range of investment-grade municipal bonds*
- Exposure to BBB rated bonds limited to 20% or less at time of purchase
- Seek to provide an experience consistent with client expectations
- Employ a total return approach—consider both yield and risk
- Emphasize opportunities that have price upside potential
- Strive to avoid bonds whose yields may not offset their risks
Tapping Fidelity's Fixed Income expertise
Fidelity Management & Research Company LLC (FMR) brings investors a rich history of managing fixed income investments for over 50 years. Using proprietary research, models, and tools, FMR can analyze thousands of securities across the investment-grade municipal bond universe. This capability allows them to build a diversified limited duration municipal bond strategy to help generate income and manage risk—all while helping your account stay aligned with your preferences.
40+ active portfolio managers
- Lead the investment team
- Ensure each strategy is managed to its specific objective
- Select appropriate bonds for individual client portfolios
130+ research and credit analysts
- Identify attractive bonds and monitor existing holdings
- Conduct up front and ongoing credit quality analyses
- Assess individual issuers' value and outlooks
- Employ specialized tools and models
30+ professional traders
- Seek to improve returns by using proprietary technology and timely market knowledge
- Pursue flawless trade execution
Fidelity's Fixed Income division believes investment success is a function of teamwork—involving portfolio managers, quantitative analysts, credit analysts and traders. Their investment team will actively manage your account, putting their knowledge, experience, and resources to work as they seek to uncover opportunities in all types of markets.
Source: Fidelity Investments.
