FXNAX "Asset Backed Sector Diversifaction"

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bck63
Posts: 248
Joined: Fri Sep 28, 2018 4:59 pm

FXNAX "Asset Backed Sector Diversifaction"

Post by bck63 » Sun Apr 14, 2019 8:37 am

Good morning. I'm trying to figure out what the following means. It is in the Composition section of the fund profile for FXNAX, Fidelity Total U.S. Bond Index Fund:

Asset-Backed Sector Diversification
AS OF 3/31/2019

Credit Card 60.88%

Car Loan 39.12%


The explanation says "Displays the distribution of assets that are used to back the bonds in which the fund is invested, as of the date shown. Percentages shown describe the portion of the fund's total net assets, unless otherwise stated."

It seems to state that 100% of the funds assets are backed by credit cards and car loans. Yet it also says that 68% of the funds assets are in government-related securities.

Any help on understanding this would be greatly appreciated. Also, is it safe to have a large percentage of assets backed by car loans and credit cards only?

Would an intermediate term treasury index fund be better?

Thanks very much.

pkcrafter
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Re: FXNAX "Asset Backed Sector Diversifaction"

Post by pkcrafter » Sun Apr 14, 2019 9:22 am

FXNAX is a standard "total bond" fund, and Morningstar shows it has 29% in "securitized" investments and most all of it is in mortgaged backed securities. FXNAX is very similar to Vanguards total bond index, but Vanguard's VBMFX has 25% in securitized investments.

http://portfolios.morningstar.com/fund/ ... ture=en-US

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

dalbright
Posts: 90
Joined: Sun Oct 21, 2018 6:23 am

Re: FXNAX "Asset Backed Sector Diversifaction"

Post by dalbright » Sun Apr 14, 2019 10:08 am

FXNAX is a good total bond fund and holds more government class bonds than many total bond funds, as well as a lower proportion of corporate. As a result, it would do better in a flight to quality but worse in a flat period as it is taking less "risk" as compared to similar funds. FXNAX has such a small proportion of those asset backed bonds, its .38% on morningstar that I wouldnt worry at all about them.

The choice on a type of fund you would like depends on your goal with bonds. Most here would say you are better off taking risks with equity and just having a total bond fund such as fxnax. Treasury is good if you are holding the bonds as purely a flight to quality in a down market nature but in times of low rates they don't earn as much as a total bond fund. Long term treasury will go up the most in a down market but is also the most volatile and interest rate sensitive.

For bonds I personally own Pimix (multi-sector), fxnax (total bond), vwinx (stock/bond mix) and edv (long term treasury) but each for different purposes.

Topic Author
bck63
Posts: 248
Joined: Fri Sep 28, 2018 4:59 pm

Re: FXNAX "Asset Backed Sector Diversifaction"

Post by bck63 » Sun Apr 14, 2019 5:46 pm

Thank you both for your responses.

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