Fidelity Expands Suite of Short Duration Bond Funds

Fidelity Investments has expanded its line-up of short duration bond mutual funds for investors and financial advisers.

The firm launched Fidelity Limited Term Bond Fund, Fidelity Conservative Income Municipal Bond Fund and Fidelity Short Duration High Income Fund (adviser and retail shares classes).

“A top concern for many bond investors today is their exposure to interest rate risk and the negative impact rising rates could have on their bond portfolios,” says Charlie Morrison, president of Fidelity’s Fixed Income division. “For investors seeking to lower this risk, short duration funds can be an appropriate addition to a well-diversified bond portfolio.”

While the Federal Reserve has indicated it is unlikely to raise the short-term Fed funds rate in the near term, longer-term rates may rise if the Fed tapers its bond purchases, Fidelity says. Under these circumstances, short duration bonds are generally less sensitive to rising interest rates. Even against a backdrop of declining interest rates over the past couple of decades, short duration funds have demonstrated the potential to capture compelling fixed income returns with less volatility.

The three new short duration bond funds are managed with varying degrees of credit and interest rate exposure, from primarily investment grade to below investment grade and with weighted average maturities between six months to five years.

Investors can learn more about Fidelity’s short duration funds and access educational videos and investment insights by visiting