Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
ma21n2
Posts: 135
Joined: Fri Sep 28, 2018 9:25 pm

Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by ma21n2 » Mon Dec 23, 2019 3:09 pm

After reading a thread on allocating your bond portfolio to long-term treasuries when you have a long investment horizon, I decided to put 1/3 of my bonds into long-term treasuries.

My former employer's 401k through Fidelity has Fidelity Long-Term Treasury Bond Index Fund (FNBGX) as an option, which has a very low expense ratio of 0.03%. Unfortunately, this 401k has a mix of pre-tax and Roth 401k sources (about 50/50), and my plan doesn't let me put FNBGX only inside the pre-tax 401k.

I do have another 401k at Schwab, which has a Schwab PCRA account with only pre-tax 401k funds. I thought of using TLT (iShares 20+ Year Treasury Bond ETF) there, so I can use only my pre-tax funds on LT Treasuries. TLT seems to be a popular ETF, but the expense ratio is much higher at 0.15%.

What are people's thoughts on this relatively new Fidelity LT Treasury fund FNBGX? It's a lot cheaper than TLT, so I wonder if there's some downside to it compared to TLT. Would it be better to go with TLT instead despite its higher ER, since I can place it entirely inside pre-tax 401k? Thank you!

MikeMak27
Posts: 129
Joined: Fri Jul 03, 2015 4:37 am

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by MikeMak27 » Mon Dec 23, 2019 3:11 pm

My parents have both TLT and FIdelity’s long term treasury fund. They both work great for the goal that you are trying to accomplish. Buy buy buy with both. You’ll be happy with the results.
Mak 3 fund portfolio: 50% US small cap value & US Small cap (IJS, IJR), 40% Emerging Markets (IEMG, VWO, FPADX), 10% US REIT (VNQ)

atdharris
Posts: 423
Joined: Wed Jan 02, 2019 3:18 pm

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by atdharris » Mon Dec 23, 2019 3:23 pm

I expect they would both work roughly the same if they hold long-term treasuries. I own TLT for my bond allocation in my stock heavy taxable account and it works as intended.

TheJoelfather
Posts: 41
Joined: Wed Apr 17, 2019 9:49 am

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by TheJoelfather » Mon Dec 23, 2019 4:24 pm

ma21n2 wrote:
Mon Dec 23, 2019 3:09 pm
What are people's thoughts on this relatively new Fidelity LT Treasury fund FNBGX?
It's not new. FNBGX used to only be available to institutions and other tickers were used to buy-in from the retail market at higher ERs. But during the fee war, Fidelity eventually got rid of all the other share classes and rolled all the other tickers into FNBGX. You have nothing to worry about. The AUM is $2.2b, and Fidelity has the lowest ER for the class.

snailderby
Posts: 939
Joined: Thu Jul 26, 2018 11:30 am

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by snailderby » Mon Dec 23, 2019 4:40 pm

I believe FNBGX tracks the same index (or a similar index) as SPTL, VGLT, and SCHQ. TLT skews longer in duration than the other funds (20+ years vs. 10+ years).

Topic Author
ma21n2
Posts: 135
Joined: Fri Sep 28, 2018 9:25 pm

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by ma21n2 » Mon Dec 23, 2019 5:02 pm

Thanks. SPTL, VGLT, SCHQ all seem to have a greater bid/ask spread than TLT.
On ETF.com, it looks like they all have similar duration. For example, it says 17.75 years for TLT and 17.31 for VGLT.
I think I'll just stick with FNBGX for now and maybe switch to SPTL, VGLT, or SCHQ later when their avg. spread narrows in the future.

User avatar
Steve Reading
Posts: 1859
Joined: Fri Nov 16, 2018 10:20 pm

Re: Fidelity Long-Term Treasury Bond Index Fund (FNBGX)

Post by Steve Reading » Mon Dec 23, 2019 5:11 pm

Cant you buy individual treasuries and/or TIPs? Saves you a small ER and lets you get the exact duration you want.

By the way, with the current inflation of 1.8-2.1%, 30 year Treasuries at 2.35% and 30 year TIPS at 0.55%, inflation protection is basically free. In fact, you might even be getting a little premium for it. The market is pricing in some lower inflation and maybe even deflation in the future. So TIPs are looking specially attractive for us retail investors who care about real, not nominal, returns.

Post Reply