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First-of-its-Kindi Fidelity Yield InvestigatorSM Helps Financial Advisors Understand Impact of Rising Rates on Fixed Income Portfolios
Tool Designed by New Portfolio Construction Guidance Team, Which Provides Insights and Strategies to Help Inform Financial Advisors’ DecisionsBOSTON – Fidelity Financial Advisor Solutions, the unit of Fidelity Investments® that provides Fidelity mutual funds and other products to financial advisors, today introduced the Fidelity Yield InvestigatorSM -- a first-of-its-kind interactive calculator to help financial advisors as they face increasingly complex portfolio construction decisions amid a fluid fixed income environment. The calculator was created by Fidelity Financial Advisor Solutions’ new Portfolio Construction Guidance team. It provides an interactive format through which a financial advisor can research different bond sectors, using corresponding market indices, by inputting hypothetical data -- such as yield, spread, time horizons and targeted risk and return levels -- to test how a sector, or hypothetical bond portfolio, may perform in different market conditions. The Fidelity Yield Investigator makes rigorous portfolio construction analytics available at no cost in a simple, clear and interactive format, enabling financial advisors to test portfolios in different market environments.
“Many financial advisors are asking ‘what do I do with my fixed income portfolio if interest rates rise?,’” said Robert Litle, senior vice president, Fidelity Financial Advisor Solutions. “This potential rising interest rate environment represents a new reality for many advisors, who have seen rates trending downward for years. Financial advisors will have to think differently about a diversified portfolio, and the Fidelity Yield Investigator will help to simplify many of the complex calculations inherent in those portfolio construction decisions.”
The Fidelity Yield Investigator allows financial advisors to quickly adjust for a range of scenarios using easy-to-populate screens and sliding scales indicating potential yield, percent return, duration and volatility. They can explore hypothetically:
• How time horizons may impact fixed income asset classes
• The relationship between return and duration
• How portfolio composition can impact a fixed income portfolio
The interactive calculator helps advisors research and analyze hypothetical, fixed income portfolios, consisting of different bond sectors (it does not recommend specific products). The Fidelity Yield Investigator includes advanced settings that enable users to modify the currency translation effect, as well as potential default and recovery rates. It also allows financial advisors to fine-tune sector allocations by entering specific numbers in the percentage allocation boxes.
The Fidelity Yield Investigator is the first interactive calculator featured in Fidelity Financial Advisor Solutions’ “Take Charge of the New Reality” campaign, which will deliver insights to help advisors, their clients and plan sponsors keep moving forward as the economy and markets continue to evolve. The broad thought leadership campaign is designed to address three fundamental questions on the minds of many advisors and their clients:
1. Are there still growth opportunities in equities?
2. What should I consider if interest rates rise?
3. How can volatility create investment opportunities?
As part of its commitment to supporting investment professionals, Fidelity Financial Advisor Solutions has also introduced a dedicated Portfolio Construction Guidance team led by Archan K. Basu. Basu oversees a team of analysts and quantitative specialists who partner with Fidelity’s wholesalers to offer institutional quality consultative portfolio construction guidance.
“These investments in people, tools and insights underscore our commitment to deploying the breadth of Fidelity’s vast asset management capabilities to help financial advisors navigate a wide variety of market conditions in order to serve their clients’ evolving needs,” said Litle.
For more information on the Fidelity Yield Investigator Tool or the “Take Charge of the New Reality” campaign, financial advisors can visit www.advisor.fidelity.com or call their Fidelity representative.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.6 trillion, including managed assets of $1.9 trillion, as of December 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
i Fidelity and 3rd party Competitive Intelligence Review, January 2014