In the current environment, characterized by heightened volatility, now is the time to focus on greater portfolio diversification.
The diversifying power of bonds has waned, underscored by bonds’ correlation with equities during the recent market sell-off. This emphasizes why investors should consider introducing portfolio diversifiers.
For enhanced diversification, investors can look to a variety of ETFs from Fidelity Investments.
International Equity Diversification
For international equity diversification, emerging markets may stand out. The Fidelity Emerging Markets Multifactor ETF (FDEM ) provides access to emerging market companies that offer exposure to the quality, low volatility, momentum, and value factors. Furthermore, the multifactor approach could potentially mitigate some volatility, providing an additional benefit for investors.
Shorter Bond Durations
Shortened bond durations may improve risk/return fundamentals for investors. Therefore, investors may consider an allocation to short duration income products like the Fidelity Limited Term Bond ETF (FLTB ), the Fidelity Low Duration Bond ETF (FLDB ), and the Fidelity Low Duration Bond Factor ETF (FLDR ).
The three ETFs provide investment-grade, low-duration fixed income exposure. Each of these ETFs could be well positioned in the current environment. Notably, they do not require investors take on significant credit or duration risk.
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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