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Bond Funds

Bond funds are professionally managed portfolios that invest in individual fixed income securities.

Reasons to consider bond funds

  • Potential for capital preservation, depending on the fund
  • Income generation
  • Diversification for a potential hedge against stock market volatility
  • Liquidity

Funds are guided by a stated objective, generally focusing on a particular sector, such as corporate or Treasury bonds; a broad category, such as investment grade or high yield securities; or a specific time horizon, such as short-, intermediate-, or long-term bonds.

How Fidelity manages bond funds.

Types of bond funds

Investment grade

Invest in high credit quality securities issued by the U.S. Treasury, U.S. government agencies, and U.S. corporations, as well as bonds backed by mortgages or other assets. Learn more about types of investment grade bond funds.

Research investment grade bond funds.

Municipal

Invest in bonds issued by state governments and municipalities. While they tend to offer lower yields, the income they generate is generally free from federal income taxes.* Learn more about types of municipal bond funds.

Research municipal bond funds.

High yield

Invest primarily in lower credit quality securities, including convertible securities. While these can potentially provide income and total returns higher than those offered by investment grade bond funds, they do have the potential for greater volatility and risk. Learn more about types of high yield bond funds.

Research high yield bond funds.

Multisector

Invest in a mix of taxable bonds, including both high yield and investment grade securities issued by the U.S. and by foreign governments, as well as domestic and foreign corporations, giving investors the ability to create a diversified fixed income portfolio through a single fund. Learn more about multisector bond funds.

Research multisector bond funds.

International & global

International bond funds invest in a range of taxable bonds issued by foreign governments and corporations. Global bond funds invest in bonds from around the world, including bonds issued by U.S. government agencies and corporations. Learn more about types of international and global bond funds.

Research international and global bond funds.

Questions?

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.

High yield/non-investment grade bonds involve greater price volatility and risk of default than investment grade bonds.

Investments in mortgage securities are subject to the risk that principal will be repaid prior to maturity.  As a result, when interest rates decline, gains may be reduced, and when interest rates rise, losses may be greater.

* The municipal market can be affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Income exempt from federal income tax may be subject to state or local tax. If a fund investor is resident in the state of issuance of the bonds held by the fund, interest dividends may also be exempt from state and local income taxes. All or a portion of the fund’s income may be subject to the federal alternative minimum tax. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Generally, tax-exempt municipal securities are not appropriate holdings for tax advantaged accounts such as IRAs and 401(k)s.
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