Fidelity Sustainable USD High Yield Bond Paris-Aligned Multifactor UCITS ETF INC-USD

Issuer: Fidelity International

Asset Class: Fixed Income

TER: 35bps

Trading Currency: GBP

Pays Income: False

Listing Date: 24 Oct 2024

Ticker: FYUP

ISIN: IE000IKCYI88

This fund offers actively managed exposure to the US dollar-denominated high-yield corporate bond market, seeking to provide attractive income and potential capital appreciation. The active approach allows portfolio managers to dynamically adjust holdings based on their analysis of market conditions, credit quality, and issuer fundamentals, aiming to outperform passive strategies while managing risk. The strategy is designed for investors seeking higher yields than those typically available from investment-grade bonds, and who are willing to accept the associated higher credit risk.

A key differentiator is its strong commitment to sustainability, specifically adhering to the principles of the Paris-Aligned Benchmark (PAB). The investment process integrates stringent environmental, social, and governance (ESG) criteria, constructing a portfolio with a significantly lower carbon footprint that aligns with the long-term goals of the Paris Agreement. The fund actively excludes companies involved in controversial activities or those with poor ESG track records, while favouring issuers transitioning towards more sustainable business models. This dual focus on financial returns and climate objectives suits investors aiming to align their capital with positive environmental impact.

The strategy also incorporates a systematic multifactor approach to security selection, analysing bonds based on factors like value, quality, and momentum. By combining this quantitative framework with fundamental credit research and the overarching sustainability mandate, the fund aims to build a robust portfolio. This methodical process helps in identifying undervalued securities with strong fundamentals and positive ESG characteristics, potentially enhancing risk-adjusted returns over the long term. This blend of active management, sustainability, and factor investing provides a comprehensive solution for accessing the high-yield market.