Market volatility is many investors’ bane. Adding current income could really help bolster portfolios dealing with a volatile market. A current income ETF like FPFD, specifically, and its usage of preferreds, could make for a solid niche addition to portfolios.
See more: Seeking Income to Boost Portfolios? Try High Dividend ETF FDVV
The Fidelity Preferred Securities & Income ETF (FPFD ) charges a 60 basis point fee to actively invest. The current income ETF actively invests in preferred and other income-producing securities rated at least “BB.” Furthermore, the strategy targets bonds issued by domestic and foreign issuers of any maturity. Specifically, FPFD’s active managers consider factors in making its assessments, like potential for success, economic and market conditions, credit standing, and more.
How Current Income ETF FPFD Can Help
What sets preferred securities apart from bonds? Bonds and other fixed income securities are debt offerings from various issuers, with the purchaser of that debt receiving payments. Preferred securities, by contrast, are shares of a company’s stock that basically make dividend payments.
Taken together, that approach has helped the current income ETF put forward a 4.95% distribution yield (TTM) as of April 1, per Fidelity Investments data. The strategy’s most recent distribution sat at $0.092 in that time frame. The strategy has returned 6.6% since it launched, per Fidelity Investments data, which has significantly outpaced its benchmark in that time. That benchmark, the ICE® BofA® U.S. All Capital Securities Index, has returned -1.1% since FPFD launched, with data as of March 31.
Looking ahead, adding exposure to preferred securities, which carry fewer risks than debt securities, could be worth considering amid rising volatility. For investors needing some income to carry them through a turbulent 2025, a current income ETF could be worth an add.
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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