Investment management tailored to your priorities and preferences
Work with an advisor to personalize your account
During the typical early-cycle phase, the economy bottoms and picks up steam until it exits recession and then begins the recovery as activity accelerates. Inflationary pressures are typically low, monetary policy is accommodative, and the yield curve is steep. Economically sensitive asset classes such as stocks tend to experience their best performance during the early-cycle phase.
During the typical mid-cycle phase, the economy exits recovery and enters into expansion, characterized by broader and more self-sustaining economic momentum but a more moderate pace of growth. Inflationary pressures typically begin to rise, monetary policy becomes tighter, and the yield curve experiences some flattening. Economically sensitive asset classes tend to continue benefiting from a growing economy, but their relative advantage narrows.
During the typical late-cycle phase, the economic expansion matures, inflationary pressures continue to rise, and the yield curve may eventually become flat or inverted.
Eventually, the economy contracts and enters recession, with monetary policy shifting from tightening to easing. Less economically sensitive asset categories tend to hold up better, particularly right before and upon entering recession.
Once you've chosen an asset allocation and investment approach, we'll help you choose the universe from which your investments will be selected.
Depending on the investment approach you choose, you'll have up to 3 investment options available to you:
Available investment options
Blended—In this open architecture approach, the investment manager has the flexibility to choose from a wide range of either Fidelity or non-Fidelity funds.
Fidelity focused—Where available and appropriate, we'll prioritize investments managed by Fidelity.*
Index focused—Where available and appropriate, we'll select index funds, which are designed to track market indexes.*
In addition to investing in mutual funds and ETFs we may also use separately managed account sleeves1 (SMAs) as a portion of the domestic equity allocation for accounts with taxable registrations. SMAs can hold hundreds of individual securities, creating more opportunities for your investment team to leverage tax-sensitive techniques that can help reduce the impact of taxes on your investment returns. In addition to tax efficiency, SMAs allow you to directly own securities, giving you greater transparency into individual positions, as well as the ability to further customize your account.
How integrating SMAs into your account could boost after-tax returns2
As the graphic below shows, integrating SMAs into the equity portion of different asset allocations could enhance returns.
3 Year Annualized Returns of Composite Tax-sensitive Accounts
2. Performance shown represents past performance, which is no guarantee of future results. Investment return and principal value of investments will fluctuate over time. Returns for individual clients may differ significantly from the composite returns and may be negative. A client's underlying investments may differ from those of the accounts included in the composite. Composite performance is asset weighted and is net of applicable advisory fees and the underlying investments' own management fees and operating expenses.
After-tax composite returns represent the composite performance of Fidelity® Wealth Services ("FWS") accounts managed using the Blended preference and tax-sensitive investment strategies ("Tax-Sensitive accounts"). Performance information is presented for those asset allocation strategies and time periods for which composite information is available separately for accounts managed with and without the use of SMAs. Please note that not all SMAs are eligible for use in Tax-Sensitive accounts managed using the Blended preference; see the FWS Program Fundamentals for more information. Performance for periods prior to July 2018 includes performance of Fidelity® Personalized Portfolios and Fidelity® Personalized Portfolios for Trusts accounts. Composite performance is based on the returns of the managed portion of Tax-Sensitive accounts; assets in a liquidity sleeve are excluded from composite performance. In limited circumstances, accounts with nonstandard characteristics are excluded from composites. Accounts with less than one full calendar month of returns, accounts subject to significant investment restrictions, accounts with balances of less than $50,000, and accounts for which clients provided short term and long term tax rates of zero are also excluded from composites. Accounts with a do not trade restriction are removed from the composite once the restriction has been on the account for thirty days.
Account performance is calculated using time-weighted methodology which minimizes the effect of cash flows in and out of accounts and related impacts to account returns during the period. Composite returns are calculated using asset-weighted methodology which takes into account the differing sizes of accounts (i.e. considers larger and smaller accounts proportionally). Performance shown is net of the actual investment management fees paid by each client, including net of any fee credits, any underlying fund's own management fees and operating expenses, and fees attributable to SMAs, and reflects reinvestment of any interest, dividends, and capital gains distributions. Non-fee paying accounts may be included in composites. This may increase the overall composite performance with respect to the net-of-fees performance. Mutual fund redemption fees that would otherwise apply are currently paid by the Fidelity. Returns shown are not load adjusted and include changes in share price and reinvestment of dividends and capital gains, if applicable.
All distributions of qualified dividend income are assumed to meet the required holding period. In most cases, specific ID cost-basis methodology rather than average cost basis is applied when managing accounts. Performance includes accrued interest for the following securities: fixed-rate bonds, fixed-rate government bonds, and commercial paper. Other securities are computed on a cash basis only. For accounts with individual bonds, amortization and accretion for bonds are not included in performance calculations. After-tax composite returns are calculated based on a daily valuation time-weighted methodology estimating the impact of federal ordinary income taxes, Medicare surtaxes, and the alternative minimum tax where customers have indicated this applies. Returns are calculated by adjusting for actual transactions (sales, dividend earnings, etc.) that have taken place in the accounts, and by assuming that (i) each category of income is taxed at individual marginal rates in effect for the period in which the taxable transaction took place and is computed based on long-term capital gains rate and marginal income tax rate information provided by the client, and (ii) cost-basis and holding period information provided by the client is accurate. Such after-tax returns take into account the effect of federal income taxes only.
Any realized short-term or long-term capital gain or loss retains its character in the after-tax calculation. The gain/loss for any account is applied in the month incurred and there is no carryforward. We assume that losses are used to offset gains realized outside the account in the same month, and we add the imputed tax benefit of such a net loss to that month's return. This can inflate the value of the losses to the extent that there are no items outside the account against which they can be applied. We assume that taxes are paid from outside the account. Taxes are recognized in the month in which they are incurred. This may inflate the value of some short-term losses if they are offset by long-term gains in subsequent months. After-tax composite returns do not take into account the tax consequences associated with income accrual, deductions with respect to debt obligations held in accounts, federal income tax limitations on capital losses, or any year-end adjustments for dividends with respect to classifications as qualified versus non-qualified. After-tax composite returns may exceed pretax returns as a result of an imputed tax benefit received upon realization of tax losses. Withdrawals from accounts during the performance period result in adjustments to take into account unrealized capital gains across all securities in such account, as well as the actual capital gains realized on the securities.
The methodology used in calculating after-tax performance assumes that a client reclaims in full any foreign tax withheld in excess of established treaty rates with each foreign country and that the client is able to take a U.S. foreign tax credit in an amount equal to any foreign taxes paid. These two assumptions increase the after-tax performance we report, and clients who do not make such reclamations or take a U.S. foreign tax credit will experience performance that is lower than that reported herein. It is currently estimated that our assumption that a client makes a full reclamation of excess foreign taxes withheld will increase the reported after-tax performance by as much as 4 basis points on an annual basis for accounts registered to natural persons, and as much as 8 basis points for accounts registered to certain entities, including trusts. The actual amount could be higher or lower than our estimate, and will depend on the amount of international equity exposure in an account, the mix of foreign securities held and their applicable foreign tax rates, as well as the volume of distributions from those securities. Clients should be aware that the reclamation process for foreign tax withholding can be complex and time-consuming, and that they can engage an agent (for a fee) to assist them with the reclamation process.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Fidelity® Wealth Services provides non-discretionary financial planning and discretionary investment management through one or more Portfolio Advisory Services accounts for a fee. Advisory services offered by Fidelity Personal and Workplace Advisors LLC (FPWA), a registered investment adviser, and Fidelity Personal Trust Company, FSB (FPTC), a federal savings bank. Nondeposit investment products and trust services offered through FPTC and its affiliates are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, are not obligations of any bank, and are subject to risk, including possible loss of principal. Discretionary portfolio management services provided by Strategic Advisers LLC (Strategic Advisers), a registered investment adviser. Brokerage services provided by Fidelity Brokerage Services LLC (FBS), and custodial and related services provided by National Financial Services LLC (NFS), each a member NYSE and SIPC. FPWA, Strategic Advisers, FPTC, FBS, and NFS are Fidelity Investments companies.
Tax-sensitive investment management techniques are applied in managing taxable accounts (including "tax-loss harvesting") on a limited basis, at the discretion of Strategic Advisers primarily with respect to determining when assets in a client’s account should be bought or sold. As a discretionary portfolio manager, Strategic Advisers may elect to sell assets in an account at any time. A client may have a gain or loss when assets are sold. Strategic Advisers does not currently invest in tax-deferred products, such as variable insurance products, or in tax-managed funds, but may do so in the future if it deems such to be appropriate for a client. Strategic Advisers does not actively manage for alternative minimum taxes; state or local taxes; foreign taxes on non-U.S. investments; or estate, gift, or generation-skipping transfer taxes. Strategic Advisers relies on information provided by clients in an effort to provide tax-sensitive investment management, and does not offer tax advice. There are no guarantees as to the effectiveness of the tax-sensitive management techniques applied in serving to reduce or minimize a client’s overall tax liabilities, or as to the tax results that may be generated by a given transaction. Except where Fidelity Personal Trust Company (FPTC) is serving as trustee, clients are responsible for all tax liabilities arising from transactions in their accounts, for the adequacy and accuracy of any positions taken on tax returns, for the actual filing of tax returns, and for the remittance of tax payments to taxing authorities.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917