Ultrashort Bond at Fidelity

[chang]

What happened to Fidelity Ultrashort Bond Fund? Maybe my mind is playing tricks on me, but I thought there was such a fund.

I use VUSFX at VG as my principal ST/ballast. At TDA I have RPHIX for the same purpose, plus a little BSV as a cash parking lot. I recently sold off some stuff at Fido and want to put the proceeds into the equivalent of VUSFX. Here is the list of Fidelity funds (click the "Fixed Income" tab). Is FCONX the new Fido UST Bond fund? Did they rename it?

Here is a chart of VUSFX, RPHIX and FCONX. FCONX looks underwhelming.

Here is the same chart with VBIRX and FSHBX added. I don't really want these two (majority USG bonds) but I added them to show that, again, Fidelity seems to lag VG.

If Fido doesn't have a compelling option, I'll just move the cash to VG and put it into VUSFX.

[yogibearbull]

In the old pre-2009 times, there were different types of ultra-short-term bonds. These heavily used short-term HY bonds thinking what could go wrong in a few months? But then the financial crisis came like tsunami and took the ultra-ST bond funds with it. Those from Schwab, Fidelity, etc were affected. These were closed eventually.

For a few years, there was no M* ultra-ST bond category, or there were no funds in that category.

But then a new ultra-ST bond category emerged that uses only ST investment grade bonds. From Fido, that is FCONX/FCNVX [inception 3/3/11]. Schwab was so burned that it hasn't any yet.

So, the answer to your question is that yes, there was an old Fido Ultra-ST bond fund, it went away, and now there is a new Fido Ultra ST FCONX/FCNVX, and it is the only such fund at Fido.

Current M* definition of Ultra ST bond funds:

Ultrashort Bond

Ultrashort-bond portfolios invest primarily in investment-grade U.S. fixed-income issues and have

durations typically of less than one year. This category can include corporate or government ultrashort

bond portfolios, but it excludes international, convertible, multisector, and high-yield bond portfolios.

Because of their focus on bonds with very short durations, these portfolios offer minimal interest-rate

sensitivity and therefore low risk and total return potential. Morningstar calculates monthly breakpoints

using the effective duration of the Morningstar Core Bond Index in determining duration assignment.

Ultrashort is defined as 25% of the three-year average effective duration of the MCBI.

Category Group Index: Barclays US Agg Bond TR USD

Category Index: Barclays Govt/Corp 1 Yr Duration TR USD

Morningstar Index: Morningstar US 1-5Y Core Bd TR USD

[chang]

Thanks yogibearbull . I specifically look for a BBB-BB rated portfolio, which I guess is "between" IG and HY. I think this works well in a very short-duration fund. VUSFX is BBB (so is the UST Category); RPHIX is BB. I don't want a ST, AA-rated fund like VBIRX which achieves about the same returns as the UST funds but with more interest rate volatility.

Thanks for the history ... I wasn't aware of all those details.

[chang]

Went with VUSFX. Fido (amazingly) deposits money from core to my bank account on the same day. VG lets you purchase directly from bank account funds.

VUSFX seems hard to beat IMO for ballast with some income. It also barbels with the LT bonds in Wellesley and Wellington.