Fidelity Portfolio Manager Matt Bartlett’s preference for companies with a durable credit profile and that offer high potential for attractive long-term investment returns has led him to favor fixed-income issues from the financials sector, particularly insurers and large globally important banks in the U.S. and Europe.
“While corporate credit valuations as a whole are not overly compelling right now, yields are attractive, and we have found solid undervalued opportunities in certain segments of this category of the bond market,” says Bartlett, who co-manages Fidelity® Corporate Bond Fund (FCBFX) with Jay Small and Ben Tarlow, in close collaboration with Fidelity’s fixed-income research team.
The fund is a credit-focused bond strategy that seeks high current income, with the managers concentrating on areas where they believe they can repeatedly add value, including asset allocation, sector and security selection, yield-curve positioning and opportunistic trading.
In co-managing the fund since 2016. Bartlett emphasizes bottom-up security selection, prioritizing what he considers to be the research team’s best ideas.
The fund is typically overweight bonds rated BBB – the lowest investment-grade tier – which Bartlett says normally provide a significant yield advantage over the broader investment-grade corporate market.
In the current corporate credit environment, Bartlett says he is focused on banks with a strong capital and liquidity position, offering bonds that appear attractively valued against a solid fundamental profile.
Some illustrative holdings at the end of July included UBS, which is headquartered in Zurich, Switzerland, as well as Paris-based BPCE SA and Société Générale. He explains: “We really like banks that are larger and more systemically important to the country they’re in.”
As for insurers, Bartlett sees additional opportunity. “Given their large fixed-income portfolios, insurance companies have benefited from higher bond yields,” he says.
Elsewhere in financials, the managers continue to have shared a positive view of aircraft lessors, believing the debt of these issuers will benefit from pent-up demand for airplanes from commercial carriers.
Bartlett cites Dublin-based AerCap Holdings as a recent contributor for the fund. However, due to spread compression the past several months, the valuations among aircraft lessors aren’t quite as attractive as they were last year, he notes.
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Matt Bartlett is a portfolio manager in the Fixed Income division at Fidelity Investments.
In this role, Mr. Bartlett is a member of the bond division’s Credit/Liability Driven Investments Team. As part of this team, he manages the Fidelity Corporate Bond ETF, Fidelity and Fidelity Advisor Corporate Bond Fund, Fidelity and Fidelity Advisor Global Credit Fund, and various portfolios for institutional clients.
Prior to assuming his current position, Mr. Bartlett was managing director of research responsible for managing a team of credit analysts covering companies in a diverse range of industries, including utilities, energy, telecommunications, technology, consumer, and manufacturing. Previously, Mr. Bartlett was a fixed income research analyst covering the telecommunication, media, and entertainment sectors.
Before joining Fidelity in December 2005, Mr. Bartlett was a sell-side principal and senior research analyst at Bank of America. Previously, he was a sell-side research analyst covering health care, telecommunications, and media for Alex Brown & Sons, and a buy-side fixed income credit analyst for Aegon Investment Management. He has been in the financial industry since 1992.
Mr. Bartlett earned his bachelor of business administration degree in finance from James Madison University and his master of business administration degree in finance from Loyola University.