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Fidelity Launches Active Muni Bond Fund

By Dinah Wisenberg Brin

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Fidelity Investments on Wednesday announced the launch of the Fidelity Municipal Core Plus Bond Fund (FMBAX), adding to the investment company’s active fixed income strategies lineup.

The fund is available commission-free and with no investment minimum to individual investors and financial advisors through Fidelity’s online brokerage platforms. It has a 0.37% net expense ratio and a 1.28% gross expense ratio, according to Fidelity.

Measured against the Bloomberg Municipal Bond Index and the Fidelity Municipal Core Plus Bond Composite Index, the Fidelity Municipal Core Plus Bond Fund aims to provide a high current yield exempt from federal income taxes and may also consider capital growth.

With retail and institutional demand for higher yielding municipal bond funds, this new product seeks to offer a strong yield and total return profile, with potentially lower volatility than pure high yield funds, according to Fidelity.

“Fidelity’s growing suite of active fixed income investment products leverage Fidelity’s breadth and depth of resources and expertise as an active manager to identify investment opportunities across the credit spectrum,” Jamie Pagliocco, Fidelity’s fixed income head, said.

“With the launch of the Fidelity Municipal Core Plus Bond Fund, we continue to meet the evolving needs of investors with this intermediate fixed income offering that includes both investment-grade and non-investment-grade exposure to municipal securities.”

The fund will normally invest at least 80% of assets in municipal securities for which interest is exempt from federal income tax. While the majority of the fund’s municipal securities are investment grade, the investment team may add up to 30% in non-investment-grade exposure when the market environment is favorable, add up to 20% in taxable debt and use derivatives opportunistically, Fidelity said.

The Fidelity Municipal Core Plus Bond Fund is co-managed by Cormac Cullen, Michael Maka and Elizah McLaughlin. As members of Fidelity’s municipal bond team, they currently co-manage Fidelity’s national municipal bond funds, Fidelity’s state municipal bond funds and various municipal bond portfolios for institutional clients. The municipal bond team managed more than $43.7 billion in assets as of Dec. 31.

(Image: Shutterstock)

Dinah Wisenberg Brin

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