Understanding fixed income in Fidelity’s All-in-One ETFs
Fixed income is the shock absorber inside some Fidelity All-in-One ETFs
Riding fast can be fun, but anyone who has hit a pothole at speed knows how quickly things can get uncomfortable. That’s where suspension comes in. It doesn’t remove bumps from the road. It simply helps make it easier to handle, so the ride feels more controlled and manageable. In portfolios that include it, fixed income can play a similar role.
Not every Fidelity All-in-One ETF includes fixed income exposure. That’s because different portfolios are built with different objectives in mind. When fixed income is included, it’s intended to help steady the ride by adding balance alongside equities.
Here’s what you need to know about the strategic role fixed income can play:
What is fixed income
Fixed income is an asset class. When investors talk about fixed income, they usually mean bonds. Buying a bond means you’re lending money to a government or company. They pay you for that loan through interest payments, and you typically get your original investment back at the end. Bonds are not about speed or acceleration. Rather, they are part of the suspension system that allows you to stay steady.
Why fixed income (bonds) can feel confusing
Many investors struggle with fixed income for a few common reasons:
- Bonds can still go down in value
This often surprises investors, especially those who expect bonds to always be stable. Bond prices can fluctuate due to changes in interest rates, credit conditions, or market expectations.
- Interest rates can feel complicated
It’s not always easy to connect changes in interest rates to what’s happening in day-to-day life, which can make bond behaviour harder to understand.
- Bonds are often mistaken for cash
While bonds are generally considered lower-risk than stocks, they don’t behave the same way as cash and can fluctuate in value.
While fixed income investments are typically lower risk, that doesn’t mean they come without risk. Just like when riding a bike with a well-adjusted suspension system, you can still hit bumps along the trail. Fixed income isn’t meant to eliminate obstacles but to help those bumps feel more manageable along the way.
What fixed income is meant to do in a portfolio
Fixed income is usually there to play a supporting role. It can help smooth out some of the ups and downs that come with stocks, add balance since bonds do not always move in the same direction as stocks, and provide income through interest payments along the way. The point is not to make a portfolio more exciting. It is to make it easier to stay invested when markets get uncomfortable.
In some cases, fixed income plays a more central role. All fixed income portfolios are typically designed for investors who prioritize income, capital preservation, or lower volatility over growth.
How Fidelity uses fixed income in All-in-One ETFs (when it’s included)
Some Fidelity All-in-One ETFs include exposure to fixed income. This exposure is used as a stability sleeve within the portfolio. The mix of fixed income, stocks, and digital assets is designed to match the overall risk level of that particular ETF.
Bikes have different suspension systems. They can be loose or tight, and what works for you as a cyclist may not be as comfortable for another cyclist. Similarly, All-in-One ETFs have different setups. More conservative-focused ETFs typically include more fixed income investments, which adds stability. Growth-focused ETFs include less fixed income and instead focus on the higher potential of stocks. Fidelity strikes a balance in every All-in-One ETF that aligns with the experience investors prefer.
Keeping the ride smoother
In Fidelity All-in-One ETFs that include fixed income exposure, bonds act as a shock absorber, helping smooth volatility, add balance, and support a more consistent investing experience. If a portfolio is equity-only, this sleeve simply isn’t part of the design.
