Active ETFs have seen widespread adoption, particularly within the fixed income space.
By the end of 2024, 40% of advisors had allocations to active ETFs, compared to just 13% in 2022, according to data from Fidelity as of December 31, 2024. This increase in active ETF usage is most notable in the fixed income asset class, followed by U.S. equity.
As advisors consider adding an allocation to active fixed income ETFs, the Fidelity Limited Term Bond ETF (FLTB ) and the Fidelity Corporate Bond ETF (FCOR ) may be worth consideration.
FLTB is a short-duration investment-grade bond strategy focusing primarily on U.S. corporate credit. The fund typically maintains a dollar-weighted average maturity of two to five years.
On the other hand, FCOR is a credit-focused bond strategy that seeks a high level of current income. The fund primarily invests in investment-grade corporate bonds and other corporate debt securities and repurchase agreements for those securities. However, the fund may invest in lower-quality debt securities and engage in transactions that leverage the fund, including derivatives.
Why Active Matters for Fixed Income ETFs
Just 42% of active strategies survived and outperformed their passive peers in 2024, according to Morningstar’s Year-End 2024 U.S. Active/Passive Barometer Report. This data point underscores many investors’ doubts that active management can enhance performance.
While just 38% of U.S. equity active strategies were successful in 2024, the numbers are much more promising when focusing on active fixed income strategies.
In fact, over 63% of active bond strategies survived and beat their average passive peer, with all three fixed-income categories (intermediate core bond, corporate bond, and high-yield bond) posting significant gains, according to the report. Active intermediate core bond managers led with a 79% success rate, highlighting the performance advantage that active management can potentially deliver in the fixed income space.
For more news, information, and analysis, visit the ETF Investing Channel.
Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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