Fidelity® Intermediate Municipal Strategy
This separately managed account seeks to generate federally tax-exempt interest income while limiting risk to principal over the long term.*
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Fidelity® Intermediate Municipal Strategy FAQs
How can this strategy help me meet my goals?
Investing in municipal bonds may help investors in high tax brackets generate federally tax-free interest income.* Municipal bonds can also help offset the volatility associated with taxable bond and stock investments in an investor's overall portfolio. Although these potential benefits can make municipal bonds appealing, many investors find it challenging to navigate the large and fragmented municipal market.
This separately managed account offers investors a diversified portfolio of investment-grade bonds and seeks to generate federally tax-exempt interest income, while limiting risk to principal over the long term. A separately managed account allows investors to directly own the securities, so investors will know exactly what they own and how their investments are being managed.
Who manages my money?
Fidelity Personal and Workplace Advisors LLC (FPWA),has engaged Fidelity Management & Research Company LLC, a registered investment adviser and a Fidelity Investments company, to provide the day-to-day discretionary portfolio management of Fidelity Intermediate Municipal Strategy accounts, including investment selection and trade execution, subject to FPWA's oversight.
What kind of investments can I expect in my account?
The investment team will typically select 30-80 different bonds** per account—with no single issuer making up more than 15% of a national portfolio. A national portfolio can hold bonds issued within any of the 50 states or U.S. territories. The investment team will purchase investment-grade1 municipal bonds with a long-term credit rating of BBB− or higher at time of purchase and will ensure that the overall account maintains an average credit rating of A−. Municipal bonds are issued by various state and local governments who use the money for public projects like building schools, highways, hospitals, etc. The income from these bonds is generally free from federal taxes, although a portion may be subject to state and local taxes.
How are the bonds chosen for my account?
The investment team looks at many factors when assessing risk for each proposed bond, including but not limited to, issuer specific credit risk, sector risk, interest rate risk, and liquidity risk. The team assigns a proprietary credit rating to each bond they purchase, which is independent of the rating agencies. The team focuses on selecting investment-grade bonds that offer strong relative value in an effort to generate income while seeking to limit risk to the money invested.
Each account is diversified across a variety of sectors and maturities to help ensure it is not concentrated in any one area, can better handle changes in interest rates, and potentially helps reduce overall risk to principal over the long term.
Can I choose my own investments?
The investment team will select all bonds for each account. They may be able to build a portfolio around certain investment-grade municipal bonds an investor currently owns, provided they meet the selection criteria and overall portfolio investment guidelines.
Can I request that the manager only buy bonds issued within the state in which I pay taxes?
The national portfolio can hold bonds issued within any of the 50 states or U.S. territories. An investor can choose a single state-preference option if his or her state of residence is California, Massachusetts, or New York. If this option is chosen, our investment team will seek to purchase bonds only issued within the chosen state. However, there is no guarantee, and the percentage of single-state bonds in a portfolio may vary below 100%. (With the state-preference option, state tax-exempt interest is emphasized over national diversification.)
Can I personalize my account?
Investors may request reasonable restrictions regarding the bonds held in their portfolio.
How long will it take to invest my account?
In general, under normal market conditions, it will take 60 to 906 days to construct a client's complete portfolio. Each account is reviewed daily, yet it is normal to not see initial trades for the first few weeks. The investment team takes great effort in creating thoughtfully researched, personalized portfolios that are designed for each client’s financial goals. The investment team will carefully evaluate each bond selected in an effort to create a portfolio that is well-diversified across sectors and maturities.
Can I add funds to my account?
Yes, investors can add funds to their accounts. Funds will remain in cash until there is enough to buy additional bonds.7
Can I withdraw funds from my account?
Yes, a client can request a withdrawal from his or her account at any time, with no Fidelity fees or penalties. We will process all withdrawal requests promptly, but please note that it may take several business days to complete a withdrawal.
What is the account minimum?
The minimum funding amount is $350,000.4 Accounts can be funded with a check, bank wire, an exchange of assets from an existing Fidelity account, or a transfer of eligible assets from an account at another institution. Accounts using eligible in-kind funding also have a minimum funding amount of $350,000.
How much does it cost?
The annual advisory fee ranges from 0.35% to 0.40%, based on account balance.5
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Diversification and asset allocation do not ensure a profit or guarantee against loss.
Lower yields – U.S. Treasury bonds typically pay less interest than other bonds in exchange for lower default or credit risk.
Interest rate risk – U.S. Treasury bonds and municipal bonds may be susceptible to fluctuations in interest rates, with the degree of volatility increasing with the amount of time until maturity. As rates rise, prices will typically decline.
Call risk – Some U.S. Treasury and municipal bonds carry call provisions that allow the bonds to be retired prior to stated maturity. This typically occurs when rates fall.
Inflation risk – With relatively low yields, income produced by U.S. Treasury and municipal bonds may be lower than the rate of inflation. This does not apply to Treasury Inflation-Protected Securities (TIPS), which are inflation protected.
Credit or default risk – Investors need to be aware that all bonds have the risk of default. Investors should monitor current events, as well as the ratio of national debt to gross domestic product, Treasury yields, credit ratings, and the weaknesses of the dollar for signs that default risk may be rising.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917