Is Fidelity’s Multi-Asset Income Fund for You?

New Managers Join Fidelity China Fund 

Fidelity’s China Region fund manager Bobby Bao has decided to return to the U.S., prompting the appointment of two co-managers who will eventually assume full-time management.

Ivan Xie and Stephen Lieu began co-managing the $1.5 billion fund on April 4, the start of a transition leading up to Bao’s eventual departure. When it comes to managing assets in China, Fidelity strongly believes that having managers located in Hong Kong is in the fund’s (and shareholders’) best interests.

While the announcement came last month, it seems like Bao and Fidelity already had a plan in place toward the end of 2017, if not before. From the end of 2016 to the end of 2017, Bao’s ownership stake in the fund went from the $100,000 to $500,000 range to zero. This indicates to us that Bao knew he’d be pulling up stakes well in advance of the news going public.

Bao will make a move into another role at Fidelity stateside once he’s completed showing Xie and Lieu the ropes. He has helmed the fund on his own since October 2011.

Fidelity tapped Xie and Lieu on the basis of their experience as analysts covering various market sectors in the China region over the last decade.

Xie previously served as a research analyst for Fidelity, covering Southeast Asian financial companies, Indonesian consumer stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company., greater China materials firms and Chinese small- and mid-cap internet companies. He has a decade of experience in the financial industry and joined Fidelity in 2010.

Lieu has also been in the investment business since 2008. He worked as an equityThe amount of money that would be returned to shareholders if a company’s assets were sold off and all its debt repaid. and high-yield research analyst, where he’s specialized in Asian technology stocks and the Chinese consumer sectors. He’s been at Fidelity since 2013.

The managers are changing, but Fidelity says the investment objective of the China Region and the philosophy driving stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. selection will remain the same.

We’ll be keeping tabs on the fund, as manager changes can be inflection points for funds. Investors interested in China Region should be aware that it is a niche fund whose fortunes are largely tied to a single economy. We believe most investors would be better off diversifying their foreign investments among multiple countries and regions around the world.

Multi-Asset Fidelity Fund Open for Business 

Do-it-yourself investors have a new “multi-asset” option at Fidelity. Since March 28, retail investors have been able to purchase shares in the firm’s Multi-Asset Income fund, which launched in September 2015 as Advisor Multi-Asset Income.

This newly available balanced fund provides individuals with a one-stop shop for investing in stocks and bondsA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates.. The “multi-asset” descriptor may be a bit misleading, as the fund invests mostly in just two asset types: StocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. and bonds. As of April 30, it was allocated 40.3% to stocks and 57.9% to bonds, with the remainder in cash.

The retail share class launched with a 0.86% net expense ratio.

The fund fills a niche in Fidelity’s balanced fund line-up by tilting more heavily towards bonds than the firm’s other offerings in the space, which include Fidelity Balanced and Fidelity Puritan (both will allocate 50%–70% of assets to stocks over time) and Fidelity Strategic DividendA cash payment to investors who own stock in the company. & Income (70%–85% stocks).

Multi-Asset Income boasts a trio of veteran Fidelity managers. Lead Manager Adam Kramer also runs Fidelity’s Convertible Securities fund. In addition, he serves as co-lead manager of Fidelity Equity-Income and is a co-manager on Fidelity’s Strategic Dividend & Income, Strategic Real Return and Strategic Income funds.

Kramer’s two co-managers are Ford O’Neil and Ramona Persaud. O’Neil is lead manager on Fidelity Total BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. fund and co-lead manager on the Fidelity Strategic funds. Persaud shares duties with Kramer on Fidelity Equity-Income and co-manages the equity sleeve of Fidelity Strategic Dividend & Income.

Balanced funds, particularly funds with a majority of the portfolio in bonds, are typically most appropriate for conservative investors who are seeking current income with the potential for some capital appreciation. How well this young fund delivers on that objective over the long-term remains to be seen.

Active Bond ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. Fee Reductions at Fidelity 

Who doesn’t love a discount? Last month, Fidelity lowered costs on its three actively managed bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. exchange-traded fundsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. (ETFs)A type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index..

Corporate Bond ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., Limited Term Bond ETF and Total Bond ETF previously charged the same expense ratio, 0.45%, as their mutual fund clones. The good news for ETF investors? The ETF versions now cost 0.36%.

The reduction means investors will keep more of their money over time, even if the amount is relatively trivial. In this case, investors were paying $45 annually per $10,000 invested; they will now pay $36 per $10,000.

We covered these funds when they were launched in October 2014. The actively managed ETF market remains a bit player in the entire ETF industry—there are nearly 250 of them as of this writing, with about $55 billion in assets.

That’s small change compared to the $3.4 trillion ETF industry. But if Fidelity can continue to gain market share in this space on its well-deserved reputation for active management, they should be able to continue making their ETFs more affordable for investors in the years ahead.

About Adviser Investments

Adviser Investments is a full service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994, and have more than 3,500 clients across the country and over $6 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, with particular expertise in Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To.

Our minimum account size is $350,000.  To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.