The Fidelity Low Duration Bond Factor ETF (FLDR ) has something to celebrate. The ETF was bumped up to Gold rated by Morningstar recently. That recognition comes as the fund doubled its AUM over the course of 2024. Specifically, the strategy saw its AUM rise from $330 million on January 1, 2024, to $660 million as of December 31, 2024, per YCharts data. Those metrics may invite investors and advisors to consider the role a low duration bond ETF like FLDR might play.
See more: 4 Reasons This Large-Cap Can Perform in Uncertain 2025
FLDR tracks the Fidelity Low Duration Investment Grade Factor Index for a 15 basis point fee. The low duration bond ETF’s index includes floating-rate notes and U.S. Treasurys maturing in seven to ten years. Together, the strategy aims to maintain a duration of one year or less.
FLDR's Low Duration Bond ETF Approach
The fund has returned 5.8% over the last one-year period, per Fidelity Investments data as of March 31. That outperformed the Bloomberg U.S. Aggregate Bond Total Return index, in that time. The index returned 4.88% as of March 31, per Fidelity Investments data.
Why add FLDR, specifically, moving forward? The low duration strategy could provide an attractive option as uncertainty rises, given low duration’s relatively lower volatility as a category. Distribution yields on floaters are attractive, as well, with U.S. Treasury exposure adding ballast amid market chop.
Looking ahead, possible Fed rate cuts could see the yield curve steepen even more. That would likely provide a notable boost for FLDR compared to other ultrashort ETF offerings. The Fed seems poised for at least a handful of rate cuts this year, and the fund could potentially make for a solid satellite ETF addition for curious investors.
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