Fidelity Investments, one of the largest and most diversified global financial services firms with USD6.7 trillion in client assets, has launched the Fidelity Bond Income Model Portfolio and Fidelity Multi-Asset Income Model Portfolio, the first models offered by Fidelity to include ETFs, along with active and passive mutual funds.
The new models aim to generate a high level of income while focusing on managing risk through fixed income and multi-asset class investing. They expand upon Fidelity’s existing model portfolios launched in 2018, which offer total return solutions within specific levels of risk.
According to the Social Security Administration, individuals will be responsible for the majority of their income in retirement, with 62 per cent of income expected to come from their own sources versus 38 per cent coming from outside sources, such as social security or pensions. With these new models, Fidelity provides financial advisors with the ability to help their clients who are approaching retirement or already retired to address the challenge of planning for income before and during retirement.
“We’re always looking for new ways to help advisors serve their clients. These income models are designed to address an even broader range of clients’ investment needs,” says Matt Goulet, senior vice president, Fidelity Institutional Asset Management. “It’s a natural extension of Fidelity’s expertise as a retirement leader, serving more than 30 million retirement accounts.”
The Fidelity Bond Income Model Portfolio uses fixed income, investing primarily in debt securities, allocating across four general investment categories: high yield securities, preferred stock, US Government, and emerging market securities. The Fidelity Multi-Asset Income Model Portfolio uses different asset classes for additional diversification and total return benefits. It invests primarily in income-producing securities, allocating among equity and debt securities, including common and preferred stock, US Government debt, high yield debt securities, emerging market debt, and floating rate securities.
These new income model portfolios build on Fidelity’s heritage of fixed income and multi-asset class investing, in addition to Fidelity’s 70 years of investing and portfolio management experience and 30 years of experience managing models. Fidelity’s other model portfolios include the Fidelity Target Allocation Model Portfolios, which seek to combine Fidelity active and passive mutual funds to enhance potential for excess return, and the Fidelity Target Allocation Index-Focused Model Portfolios, primarily invested in Fidelity index mutual funds, making them some of the lowest cost models available.
The models enhance Fidelity’s current line-up of portfolio capabilities, which include insights from the Capital Markets Strategy team, a robust thought leadership program on portfolio construction, portfolio evaluations with the Portfolio Quick Check diagnostic tool and consultation from the Portfolio Construction Guidance team.