With the Federal Funds target rate currently at a very low level, investors need to understand the range of short duration choices available from Fidelity. Let us help you put together a mix of income-producing investments that can help in a low or rising rate period.
Learn more about investing in a low rate or volatile bond market.
Fidelity strategies to help shorten duration
One approach to managing interest–rate risk is to shorten the duration of your fixed income portfolio using bank products, bonds and mutual funds that typically pay less than longer–term bonds and riskier investments, but mature more quickly. This allows you or your fund manager to reinvest into higher–paying securities sooner.
Fidelity® Cash Management Account – Offers FDIC protection and daily liquidity.
For a longer investment horizon
Certificates of deposit (CDs) – FDIC–insured with maturities of 3 months and up. Fidelity offers both new issue and secondary CDs.
Fidelity Conservative Income Bond Funds – Choose between taxable and municipal funds. For those with an investing time frame of at least 6-12 months. Maximum weighted average maturity (WAM) is normally a year or less.
Fidelity Short-Term Bond Fund – Maintains a weighted average maturity (WAM) of 3 years or less.
Fidelity Limited Term Bond Funds – Fidelity currently offers four Limited Term Bond funds—two taxable, two municipal—that aim to provide a high level of income and capital preservation to investors who have an investment time frame of 2 to 5 years.
Fidelity Defined Maturity Funds – Invest in municipal securities whose interest is exempt from federal income tax. Securities owned by the funds mature at or around a specified maturity date.
U.S. Treasury Securities – Choose between auction/new issues and secondary market opportunities with near-term maturities.
Government Agency Securities – Original or secondary issues from Government Sponsored Enterprises such as Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
Additional short duration Fidelity mutual fund choices – including new municipal, taxable, and high yield options.