bond investing, beyond yield a deeper dive...rate hike cycles averaged 10 rate hikes of 25bps each...
TRANSCRIPT
Bond Investing,Beyond Yield—A Deeper Dive
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With a more sophisticated understanding of the bond landscape, you can make empowered decisions to help you grow your portfolio.
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Resources to help inform and assist in selecting bond investments
Education on the dimensions of bond investing
Insights for making more prudent and informed decisions
Develop an Ongoing Strategy with Fidelity
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CommonQuestions
How many of you can describe the risk/reward of different types of bonds?
1How many understand how the rate cycle impacts prices and yields of bonds?
2How many know the different bond strategies to help manage your wealth?
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Today’s Agenda
Exploring Three Dimensions
of Bond Investing
Viewing Fidelity Bond Tools & Strategies
Understanding Macroeconomic Trends
Investing in Corporate & Municipal Bonds
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Understanding Macroeconomic Trends
Markets Reactionto Easing and Tightening
Key MarketDrivers
The EconomySince 2007
U.S. TreasuryYields
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Key Market Drivers
Climbing the wall of worry…. After a punishing end to 2018 when most benchmark indices ended the year in negative territory, 2019 began with a strong bounce-back supported by the Federal Reserve’s pivot in language and later a reversal in interest rate policy.
Global GDP growth weakened by US-China trade war / tariffs,which continued to disrupt global supply chains and dampen capital investment. However, the services sector remained resilient as consumers enjoyed low unemployment, real wage / income growth, modest increases in home values and favorable financial conditions.
The yield curve inverted in the summer, in a signal that monetary policy was too tight. Meanwhile, the amount of bonds globally with negative yields reached new heights of over $17 Trillion.
The Federal Reserve switched from “normalization” to “mid-cycle adjustment”, as their 2018 forecast of around three more rate increases in 2019 were first suspended then moved into reverse with three 25bps rate cuts YTD.
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Trends:The Economy Since 2007
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. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.
Sources: Bloomberg, November 2019
Past performance is no guarantee of future results.
20182007 2008 2009 2010 2011 2012 2013 2014 20162015 2017
3.00%
2.00%
1.00%
0.00%-1000
-750
-500
-250
0
250
500
-20%
-15%
-10%
-5%
0%
5%
10%
Key Market Drivers of Post Recession and Extended Cycle Thru 2019
Unemployment Rate (%) U.S. 2-Year Treasury Yield (%) Core CPI YoY (%) Private Payrolls (right-axis)
(K)
2019
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Trends:U.S. Treasury Yields
Source: Bloomberg and NBER, November 2019
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. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.
• The last four rate hike cycles averaged 10 rate hikes of 25bps each over an average of 22 months.
1993 1995 1997 1999 2001 2003 2005 2007 2017
QE/ZIRP begins in 2009 ends in 2014.
Taper tantrum
Fed hikes rates 2015 -2018
0%
2%
4%
6%
8%
2-Year (%) 10-Year (%) Fed Funds Rate RecessionsRate Hike Cycles
2009 2011 2013 2015 2019
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2020 Outlook:
Fed Funds Target Rate: Market Expectations and Fed Projections
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Fe
d F
un
ds
Ta
rge
t R
ate
(%
)
September 2019Federal Reserve
Fed Funds Projections
Median Fed Funds ProjectionMarket Pricing of
Short Rates in 1 Year(Constant-Maturity Eurodollar Future)
Federal Funds Target Rate
CurrentMarket Expectations
As of October 31, 2019
Source: Federal Reserve and Bloomberg, as of 10/31/19.
The Federal Open Market Committee (FOMC) is the branch of the Federal Reserve Board that determines the direction of monetary policy.
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Trends:
Slower U.S. Growth Likely Over the Long-Term
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
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01
20
03
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05
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07
20
09
20
11
20
13
20
15
20
17
20
19
Labor Force Productivity Real GDP
Real GDP Components
Year-over-Year Growth (20-Year Average)
0.8%
1.4%
2.2%
Labor Force Peak
(1962–1982): 2.3%
Productivity Peak
(1949–1969): 3.0%
20-Year AART
Projections
Labor Force Growth 0.5%
Labor Market Productivity 1.2%
Real GDP Growth 1.7%
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Haver Analytics, Fidelity Investments (AART), as of 6/30/19.
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Trends:
Bond Returns vs. Interest Rates
Source: Barclays and Bloomberg as of 10/31/19. 2019 is reflecting the YTD returns as of 10/31/19.
Note: Bond returns are based on Bloomberg Barclays U.S. Aggregate Bond Index. Shaded gray bars represent periods in which the U.S. was in a recession.
Past performance is no guarantee of future results. It is not possible to invest directly in an index. All market indices are unmanaged. Index performance is not meant to represent that of any Fidelity mutual fund.
Bond Market Average Annual Returns: 7.2%
Average Annual Real Return: 3.5%
-2.9%-0.8%
-2.0%-5%
0%
5%
10%
15%
20%
25%
30%
35%1
-De
c-7
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1-D
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1-D
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YT
D 2
01
9
%
Positive Annual Return 10-Year Treasury Yield Average 10-Year Treasury Yield Negative Annual Return
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Review materials in your kit
Online:
Fidelity’s Research Page
fidelity.com/fixedincome/research
Learn More
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Three Dimensions of Bond Investing
A Range of Yields Around the Benchmarks
Understanding the Treasury Yield Curve
Bond Sub-Asset Classes Have Different Risk/Reward Characteristics
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Dimension 1:
Understanding the Treasury Yield Curve
0%
1%
2%
3%
4%
5%
2 Year 5 Year 10 Year 30 Year
June 2010—Steep Yield Curve
Treasury Corp Financial AA Muni AAA GO
Steep, upward-sloping curve:
During a recession or at the early part of the expansion. Fed (completed) cutting rates
Source: Bloomberg
Yield Curves were taken from 6/2/00, 7/21/06, and 6/4/10. UST – U.S. Treasury Actives Curve, Bloomberg; Corp – U.S. Dollar Swaps (30/360, S/A) Curve Financial AA; Muni – U.S. Muni General Obligation AAA Curve.
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3%
4%
5%
6%
7%
2 Year 5 Year 10 Year 30 Year
July 2006—Flat Yield Curve
Treasury Corp Financial AA Muni AAA GO
Dimension 1:
Understanding the Treasury Yield Curve
Source: Bloomberg
Yield Curves were taken from 6/2/00, 7/21/06, and 6/4/10. UST – U.S. Treasury Actives Curve, Bloomberg; Corp – U.S. Dollar Swaps (30/360, S/A) Curve Financial AA; Muni – U.S. Muni General Obligation AAA Curve.
Flat curve:
Close to the end of the cycle. Fed still raising rates, growth strong
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Dimension 1:
Understanding the Treasury Yield Curve
Source: Bloomberg
Yield Curves were taken from 6/2/00, 7/21/06, and 6/4/10. UST – U.S. Treasury Actives Curve, Bloomberg; Corp – U.S. Dollar Swaps (30/360, S/A) Curve Financial AA; Muni – U.S. Muni General Obligation AAA Curve.
Inverted curve:
Typically at the end of an economic cycle. Fed rate hikes complete
4%
5%
6%
7%
8%
2 Year 5 Year 10 Year 30 Year
June 2000 – Inverted Yield Curve
Treasury Corp Financial AA Muni AAA GO
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Dimension 2:
Bond Sub-Asset Classes Have Different Risk/Reward Characteristics
Source: Barclays, 10/31/19
HY Corp – Bloomberg Barclays U.S. High Yield Index, EM – Bloomberg Barclays USD Emerging Markets Index, IG Corp – Bloomberg Barclays U.S. Corporate Investment Grade Index, TIPS – Bloomberg Barclays U.S. TIPS Index, Muni – Bloomberg Barclays Municipal Bond Index, MBS – Bloomberg Barclays U.S. Mortgage Backed Securities (MBS) Index, U.S. Agg – Bloomberg Barclays U.S. Aggregate Index, UST – Bloomberg Barclays U.S. Treasury Index (see index definitions on page 48).
Past performance is no guarantee of future results.
-25%
-15%
-5%
5%
15%
25%
35%
45%
55%
HY Corp Emerging Markets
- USD Agg
IG Corp TIPS Muni MBS US Agg US Treasuries
Annual Total Returns of Major
Bond Sub-asset Classes
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD
2000 – 2019 YTD Annualized Total ReturnU.S. Aggregate: 5.08%U.S. Treasuries: 4.72%High-Yield Corporates: 6.94%
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Dimension 3:
Source: Fidelity.com as of November 2019
For illustrative purposes only
*Taxable Municipal ratings cover a rating range from Aaa to A3 from Moody's or AAA to A- from S&P.
A Range of Yields Around the Benchmarks
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Dimension 3:
A Range of Yields Around the Benchmarks
Source: Fidelity.com as of November 2019For illustrative purposes only
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Review materials in your kit
Learn MoreOnline:
Fidelity’s Fixed Income Tools
fidelity.com/fixedincome/tools
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Investing in Corporate & Municipal Bonds
Don’t Overpay for Your Bonds
Current Trends in the Corporate and Municipal Bond Markets
Research Before You Invest
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Corporate Bonds:
Corporate Bond Spreads Return to Historical Averages
Source: Bloomberg Barclay's U.S. Agg Corp Index (Investment Grade – Left Chart) & Bloomberg Barclays’s U.S. High Yield Index (High Yield – Right Chart), October 2019
OAS – Option Adjusted Spread
OA
S
OA
S
0
3.5
7
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Investment Grade
Corporate Bond Spreads
Investment Grade IG Average
0
5
10
15
20
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
High Yield
Corporate Bond Spreads
High Yield HY Average
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Corporate Bonds:
The Corporate Bond Market Remains Healthy
IG Corporate Growth*
30
35
40
45
50
55
Ma
r-0
9
Sep-0
9
Ma
r-1
0
Sep-1
0
Ma
r-1
1
Sep-1
1
Ma
r-1
2
Sep-1
2
Ma
r-1
3
Sep-1
3
Ma
r-1
4
Sep-1
4
Ma
r-1
5
Sep-1
5
Ma
r-1
6
Sep-1
6
Ma
r-1
7
Sep-1
7
Ma
r-1
8
Sep-1
8
Ma
r-1
9
Sep-1
9
% BBB
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Ma
r-0
9S
ep-0
9M
ar-
10
Sep-1
0M
ar-
11
Sep-1
1M
ar-
12
Sep-1
2M
ar-
13
Sep-1
3M
ar-
14
Sep-1
4M
ar-
15
Sep-1
5M
ar-
16
Sep-1
6M
ar-
17
Sep-1
7M
ar-
18
Sep-1
8M
ar-
19
Sep-1
9
Total IG Corps IG Industrials Corps
IG Industrials Corps Cash
Outstanding IG Corporate Bonds($
Trilli
ons)
Gro
wth
(X
Tim
es)
Percentage IG Corporate Bonds Rated BBB
(%)
Seven Names Drove Industrial BBB Growth*
AT&T
Verizon
CVS
GM
Ford
Downgraded to BBB. Upgraded to BBB.
* From 6/29/08 through 9/30/19. IG – Investment Grade
Sources: (Top) Barclays as of 9/30/19. Non-financials cash source is FactSet as of 3/31/18. (Bottom): Fidelity and Barclays as of 9/30/19.
GE
AT&T
Verizon
CVS
GM
Ford
GE
InBev
0%
5%
10%
15%
20%
25%AT&T
Verizon
CVS
GM
Ford
GE
InBev
3x
6x
4x
0
1
2
3
4
5
6
7
IG Corporates BBB Financials BBB Industrials
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Municipal Bonds:
Municipal Yields Compared to Treasury Yields
Past performance is no guarantee of future results.
Source: Thomson Reuters MMD, November 2019
50%
75%
100%
125%
150%
175%
200%
0%
1%
2%
3%
4%
5%
6%
Mu
ni Y
ield
as a
% o
f Tre
asu
ry Y
ield
Yie
ld
10-Year Treasury Yield (%) 10-Year AAA Muni GO as a % of 10-Year Treasury (right axis)
Financial Crisis
Meredith Whitney on 60
Minutes
Detroit files for Bankruptcy – largest in history
AMBAC and MBIA report
huge losses
on credit derivatives
Talk of limiting exemption on Munis
2003 2005 2007 2009 2011 2013 2015 2017 2019
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Municipal Bonds:
The Muni Bond Market has been Shrinking and Provided Diversification
-$600
-$400
-$200
$0
$200
$400
$600
$800
$1,000
$1,200
20
05
Q2
20
06
Q2
20
07
Q2
20
08
Q2
20
09
Q2
20
10
Q2
20
11
Q2
20
12
Q2
20
13
Q2
20
14
Q2
20
15
Q2
20
16
Q2
20
17
Q2
20
18
Q2
20
19
Q2
Ch
an
ge
in T
ota
l D
eb
t O
uts
tan
din
g
Y/Y
%,
Bil
lio
ns
Change in Total Debt Outstanding
Municipals vs Corporates
Nonfinancial Corporates Municipals
Source: Federal Reserve Board, FCM; As of Q2 2019
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Mu
nis
Age
nci
esTr
easu
ries
US
Co
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S M
ort
gage
sTI
PS
US
AB
S/C
MB
SSo
uth
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rea
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bal
Co
rpIn
do
nes
iaM
exic
oTu
rkey
Jap
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S P
refe
rre
ds
Bra
zil
Ger
man
yA
ust
ralia
Fran
ce UK
Can
ada
Spai
nIt
aly
US
HY
US
Co
nve
rtib
les
Index Past 5-Year Correlation of Weekly Returns vs Municipals (in USD)
Source: ICE Data Indices, LLC, Bloomberg Finance LLP, FCM; Dec 31, 2018
Diversification does not ensure a profit or guarantee against loss. Past performance is no guarantee of future results.
The correlation matrix reveals the strength of return relationships between investments. A perfect linear relationship is represented by a correlation of 1, while a perfect negative relationship has a correlation of -1. A correlation of 0 indicates no relationship between the investments. Correlation is a critical component to asset allocation and can be a useful way to measure the diversity of a combined plan portfolio.
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Municipal Bonds:
For illustrative purposes only
Source: Fidelity.com, November 2019
Table shows Connecticut secondary offerings
Dimension 3: A Range of Issuers & Risk/Return Within a State
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Municipal Bonds:
For illustrative purposes only
Source: Fidelity.com, November 2019
Dimension 3: Research Bond-Specific Information
NEW – Municipal Bond Information from DPC
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Municipal & Corporate Bonds:
For illustrative purposes only
Source: Fidelity.com, November 2019
Dimension 3: Research Bond-Specific Information
NEW – Recent Trade Charts for Municipal & Corporate Bonds
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For illustrative purposes only
Source: Fidelity.com, January 2019
Insights:Market Commentary from Fidelity and Independent Sources
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For illustrative purposes only Source: Fidelity.com, January 2016
Research:Research New Issues with Filings, Secondaries with Reports
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Minimum markup or markdown of $19.95 applies if traded with a Fidelity representative. For U.S. Treasury purchases traded with a Fidelity representative, a flat charge of $19.95 per trade applies. A $250 maximum applies to all trades, reduced to a $50 maximum for bonds maturing in one year or less. Rates are for U.S. dollar-denominated bonds; additional fees and minimums apply for non-dollar bond trades. Other conditions may apply; see Fidelity.com/commissions for details. Please note that markups and markdowns may affect the total cost of the transaction and the total, or "effective," yield of your investment. The offering broker, which may be our affiliate, National Financial Services LLC, may separately mark up or mark down the price of the security and may realize a trading profit or loss on the transaction.
Markup - For secondary market bonds and CD purchases, the difference (dollar and %) between the Prevailing Market Price (PMP) and the trade price. Mark-up is calculated as: Mark-up / Total initial price x 100. The mark-up includes, but may not be limited to, Fidelity’s $1 per bond pricing. Details available on our fee schedule.
Pricing:
For illustrative purposes only
Source: Fidelity.com, January 2019
See disclosure on page 47 for details on this study
Fidelity’s $1 Per Bond Transaction Costs Are Very Competitive
Online:
Fidelity Viewpoint: How much am I paying for my bonds?
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Viewing Fidelity Bond Tools & Strategies
Diversifying Across Bond Types & Sectors
Using Investment Strategies to Manage Wealth
Bonds Are a Series of Cash Flows
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TOOLS
Using Bond Strategies to Manage Your Wealth
COLLEGE EDUCATION
INFLATION FEARS
STOCK SELL-OFF
RISING INTEREST RATES
OVER-CONCENTRATED
YIELD CURVE FLEXIBILITY
DIVERSIFICATION
CASH FLOW PLANNING
Common Financial Challenges Strategies
Bond Ladders
Fixed Income Analysis
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A Bond Is a Series of Cash Flows that Can Be Mixed with Others
A bond’s projected cash flows A ladder’s cash flow projection
For illustrative purposes only Source: Fidelity.com, April 2017Past performance is no guarantee of future results.
Invested
Principal
Coupons
Return of
Principal
TOOLS
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TOOLS
College EducationPlan the Exact Year and Month Your Bonds Will Mature
For illustrative purposes only Source: Fidelity.com, January 2016. Past performance is no guarantee of future results.
Spend in future defined period Ladder with matching maturities
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VTOOLS
Rising Interest Rates / Inflation FearsA Short-Dated Ladder Allows You to Reinvest Sooner
Higher rates in the future Ladder with short maturities
For illustrative purposes only Source: Fidelity.com, November 2019. Past performance is no guarantee of future results.
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TOOLS
Stock Sell-OffCertain Bond Types Are Less Correlated with Stocks than Others
Earn a return, inverse correlation Fixed income market data
For illustrative purposes only(1) Source: Morningstar using Bloomberg Barclays indices (2) Correlations 6/25/2002 – 10/31/2019Past performance is no guarantee of future results
Bond Product Type1 Correlation2 vs S&P 500
Treasury (0.40)
U.S. Aggregate (0.20)
Municipal Bonds (0.12)
Mortgage-Backed Securities (0.13)
Inv. Grade Corporate Bonds (0.07)
Emerging Market Bonds 0.46
High Yield Corporates 0.60
S&P 500 return over same period (11/26/18 – 11/25/19) was 19.8%. Source: Fidelity.comAggregate – Bloomberg Barclays Aggregate Bond Index, Treasury – Bloomberg Barclays Aggregate Bond Index Treasury, Municipal – Bloomberg Barclays Municipal Bond Index, Corporate – Dow Jones Corporate Bond Index, Agency - Bloomberg Barclays Aggregate Bond Index Agency (see index definitions on page 48)
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TOOLS
Over ConcentratedUse Fixed Income Analysis to Help Diversify Across Types and Sectors
Bond type & sector type Fixed income analysis: Diversify
For illustrative purposes only Source: Fidelity.com, January 2016. Past performance is no guarantee of future results.
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Bond Tools Demonstration
Fixed Income Analysis
Bond Ladders
Model CD Ladders
41
In Review
Exploring Three Dimensions
of Bond Investing
Viewing Fidelity Bond Tools & Strategies
Understanding Macroeconomic Trends
Investing in Corporate & Municipal Bonds
42
Attend additional seminars:
• Demystifying Bond Selection for Your Portfolio
• Understanding Bond Pricing
• Using Fidelity’s Fixed Income & Bond Investing Tools
Review OurOnline Resources
Fidelity’s Research Page
fidelity.com/fixedincome/researchNext Steps
43
How Fidelity Can Help
Available resources include:
• Your local Financial Consultant
• A local Fixed Income Consultant
• A Fixed Income Specialist at
800-544-5372
Create a more
effective, overall
fixed income
investment strategy
44
The Advantageof Working with Us
45
Why Fidelity
828113.3.0
Expert Insights and Investing Tools
Trading Security andPrivacy
Straightforward Pricing
WE BELIEVE IN MAKING THE COMPLEX, SIMPLER
Planning and Advice
46
With a more sophisticated understanding of the bond landscape, you can make empowered decisions to help you grow your portfolio.
47
DisclosuresIn 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. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.
Interest income earned from tax-exempt municipal securities generally is exempt from federal income tax, and may also be exempt from state and local income taxes if the investor is a resident in the state of issuance. A portion of the income received may be subject to federal and state income taxes, inclu ding the federal alternative minimum tax. In addition, investors may be subject to tax on amounts recognized in connection with the sale of municipal bonds, including capital gains and “market discount” taxed at ordinary income rates. “Market discount” arises when a bond is purchased on the secondary market for a price that is less than its stated redemption price by more than a statutory amount. Before making any investment, investors should review the official statement for the relevant offering for additional tax and other conside rations.
The tax information contained herein is general in nature, is provided for informational purposes only, and should not be con strued as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular s tate or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Always consult an attorney or tax pro fessional regarding your specific legal or tax situation.
References to specific securities are for illustrative purposes only and should not be construed as recommendations or invest ment advice.
A bond ladder, depending on the types and amount of securities within it, may not ensure adequate diversification of your inv estment portfolio. While diversification does not ensure a profit or guarantee against loss, a lack of diversification may result in heightened volatility of your portfolio value. Yo u must perform your own evaluation as to whether a bond ladder and the securities held within it are consistent with your investment objectives, risk tolerance, and financial circum stances. To learn more about diversification and its effects on your portfolio, contact a representative.
Diversification does not ensure a profit or guarantee against loss.
1. (from page 32) Fidelity commissioned Corporate Insight to study bond pricing, available online, for self -directed retail investors from five brokers that offer corporate and municipal bonds for comparison to Fidelity's standard online pricing. The study compared online bond prices for more than 40,000 municipal and corporate inventory matches from February 8 through February 14, 2018. It compared municipal and corporate inventories offered online in varying quantiti es. The study found that, on average, the three financial services firms identified in the chart were asking $14.55 more per bond. Corporate Insight determined the average p rice differential by calculating the difference between the prices of matching corporate and municipal bond inventory at Fidelity, including Fidelity's $1 per bond mark -up for online trades vs. the prices offered online for the same bonds from the three competitors in the table, then averaging the differences of the financial services firms. An order size of 22 bonds was selected to illustrate the hypothetical trade because this is the average for Fidelity's retail brokerage account holders who purchased individual munic ipal or corporate bonds for the 12 months ending February 2018.
Past performance is no guarantee of future results.
48
DisclosuresAll indexes are unmanaged, and performance of the indexes includes reinvestment of dividends and interest income, unless othe rwise noted. Indexes are not illustrative of any particular investment, and it is not possible to invest directly in an index.
Barclays Capital U.S. Insured Municipal Bond Index is an unmanaged, market-value-weighted index of investment-grade municipal bonds with maturities of one year or more.
Barclay Capital U.S. Agency Bond Index measures the performance of the agency sector of the U.S. government bond market and i s compromised of investment-grade native-currency U.S. Dollar-denominated debentures issued by government and government-related agencies, including the Federal National Mortgage Association ("FNMA" or "Fanni-Mae"). The index includes both callable and non-callable agency securities that are publicly-issued by U.S. Government agencies, quasi-federal corporations, and corporate and foreign debt guaranteed by the U.S. government.
Bloomberg Barclays U.S. High Yield Index is a market value–weighted index that covers the universe of dollar-denominated, fixed-rate, non-investment grade debt.
Bloomberg Barclays Emerging Market Bond Index is an unmanaged index that tracks total returns for external -currency-denominated debt instruments of the emerging markets.
Bloomberg Barclays U.S. Corporate Investment Grade Index is a market value–weighted index of investment-grade corporate fixed-rate debt issues with maturities of one year or more.
Bloomberg Barclays U.S. TIPS Index is an unmanaged index that consists of inflation-protected securities issued by the U.S. Treasury.
Bloomberg Barclays Municipal Bond Index is an unmanaged index that includes investment-grade, tax-exempt, and fixed-rate bonds with maturities greater than two years selected from issues larger than $75 million.
The Bloomberg Barclays U.S. Mortgage Backed Securities (MBS) Index tracks agency mortgage backed pass -through securities (both fixed-rate and hybrid ARM) guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). The index is constructed by grouping individual TBA -deliverable MBS pools into aggregates or generics based on program, coupon and vintage. Introduced in 1985, the GNMA, FHLMC and FNMA fixed-rate indices for 30- and 15-year securities were backdated to January 1976, May 1977, and November 1982, respectively. In April 2007, agency hybrid adjustable-rate mortgage (ARM) pass-through securities were added to the index.
Bloomberg Barclays U.S. Aggregate Index is an unmanaged index that tracks domestic investment -grade bonds, including corporate, government, and mortgage-backed securities.
Bloomberg Barclays U.S. Treasury Index is a market value–weighted index of public obligations of the U.S. Treasury with maturities of one year or more.
BofA Merrill Lynch US High Yield Master II Index tracks the performance of US dollar denominated below investment grade rated corp orate debt publically issued in the US domestic market. Each security must have greater than 1 year of remaining maturity, a fixed coupon schedule, and a minimum amount outs tanding of $100 million.
Dow Jones Corporate Bond IndexSM is an equally weighted basket of 96 recently issued investment-grade corporate bonds with laddered maturities. The index intends to measure the return of readily tradable, high-grade U.S. corporate bonds.
S&P 500® is an unmanaged market value–weighted index including 500 leading companies and captures approximately 80% coverage of available market capitalization.
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