Fidelity Releases Fixed-Income Portfolio Tool

Created by the firm’s new portfolio construction guidance team, the Fidelity Yield Investigator is designed to help advisers understand the impact of rising and falling interest rates on fixed-income portfolios, among other uses. To use the tool, advisers input hypothetical data—such as bond yields, spreads, time horizons and targeted risk and return levels—to test how a sector or hypothetical bond portfolio may perform in different market conditions.

The Fidelity Yield Investigator, the firm says, makes rigorous portfolio construction analytics available at no cost in a simple format.

“Many financial advisers are asking, ‘What do I do with my fixed-income portfolio if interest rates rise?,’” says Robert Litle, a senior vice president at Fidelity Financial Advisor Solutions. “This potential rising interest rate environment represents a new reality for many advisers, who have seen rates trending downward for years.”

Litle says that advisers will have to think differently about a diversified portfolios in such an environment. He says the Fidelity Yield Investigator will help to simplify many of the complex calculations inherent in those portfolio construction decisions.

The Fidelity Yield Investigator allows financial advisers to adjust for a range of scenarios using easy-to-populate screens and sliding scales indicating potential yield, percent return, duration and volatility. The format should help advisers easily research and analyze hypothetical, fixed-income portfolios consisting of different bond sectors, the firm says.

The tool, which does not recommend specific products, also includes advanced settings that enable users to modify the currency translation effect, as well as potential default and recovery rates. It also allows financial advisers to fine-tune sector allocations by entering specific numbers in the percentage allocation boxes.

The Fidelity Yield Investigator is the first interactive calculator featured in Fidelity Financial Advisor Solutions’ “Take Charge of the New Reality” campaign, which will strive to deliver insights to help advisers and retirement plan sponsors as the markets continue to evolve.

For more information on the Fidelity Yield Investigator tool or the “Take Charge of the New Reality” campaign, financial advisers can visit Fidelity’s website or call their Fidelity representative.