Fidelity Monitor on Conserv Income
Yahoo Finance writes "Secure Income for Fidelity Investors," which tells us, "With most things in life, perspective is everything, asserts mutual fund expert John Bonnanzio; here, the editor of Fidelity Monitor & Insight looks at fixed-income funds in the Fidelity family. With the average Fidelity stock fund up almost 19% this year, the 1.3% return of Fidelity Conservative Income Bond (FCONX) doesn't seem particularly alluring. Likewise, Fidelity U.S. Bond Index (FXNAX), up 2.9%, feels like another comparative laggard. While Conservative Income's performance is far from eye-catching, when this ultrashort-term bond fund is used as an alternative to a money market fund (which is how we use it in our Growth & Income and Income Model portfolios), its appeal becomes apparent, especially for income-oriented investors and those who are nervous about stocks and bonds alike." The update adds, "Between December 2016 and December 2018, the Fed raised rates seven times from 0.25% to the current 2.50%. As money market funds only hold very short-term 'paper,' their yields move in near-perfect sync with the Federal Funds target rate. During that same period, for example, the yield on Money Market (Fidelity's only 'prime' fund that's available to retail investors) rose from a bare-bones 0.54% to its current 2.23%. For the foreseeable future, however, yields on both money funds and ultrashort-term bond funds are likely staying put.... While it's the case that yields on money funds and Conservative Income -- and its tax-free counterpart Fidelity Conservative Income Municipal Bond Fund (FUEMX) -- have barely budged, further out on the yield curve fixed-income investors are hardly being paid much of a yield premium for assuming additional interest-rate risk."
