FBND vs. FIGB: Which Fidelity Bond ETF Deserves Your Portfolio?

The Core Difference: Size, Yield, and Risk Appetite

When exploring fixed-income opportunities, Fidelity’s bond ETF offerings present an interesting divergence. FBND (Fidelity Total Bond ETF) and FIGB (Fidelity Investment Grade Bond ETF) both seek to provide stable income and portfolio diversification, yet they cater to distinctly different investor profiles. Understanding these differences is essential, particularly as bond IPO activity and market volatility continue reshaping the fixed-income landscape.

The most striking distinction lies in portfolio scope. FBND commands $23.4 billion in assets under management compared to FIGB’s $327.1 million—a roughly 71-fold difference. This gap translates directly into trading liquidity and execution efficiency. For investors prioritizing accessible entry and exit points, FBND’s massive AUM offers a considerable advantage. Additionally, FBND’s 4.7% dividend yield outpaces FIGB’s 4.1%, while both maintain identical 0.36% expense ratios.

Performance Metrics Tell a Familiar Story

As of January 9, 2026, both ETFs delivered matching 1-year returns of 3.8%, suggesting that despite structural differences, market conditions have affected them similarly. However, volatility profiles diverge meaningfully. FBND’s beta of 0.97 indicates substantially lower sensitivity to equity market fluctuations compared to FIGB’s 1.02 beta. This distinction matters during periods of stock market turbulence—FBND’s more muted responsiveness could shield portfolios from broader market shocks.

Maximum drawdown analysis reinforces this pattern. Over four years, FBND experienced a (15.48%) peak-to-trough decline versus FIGB’s steeper (16.18%) descent. The modest gap suggests FBND’s diversification strategy provides marginal but meaningful downside protection.

Portfolio Construction: Breadth vs. Precision

The philosophical approach to bond selection separates these two vehicles fundamentally. FBND maintains an expansive universe of 2,742 bond holdings, with sector tilting toward energy (95%) and utilities (5%). No single position exceeds 1% of assets, exemplifying true portfolio diversification. Top holdings—Bank of America 3.419% coupon (maturity 12/20/28), JPMorgan Chase 4.452% (12/05/29), and Goldman Sachs 3.691% (6/05/28)—remain appropriately scaled within the larger portfolio.

FIGB pursues a narrower mandate through its 180-position portfolio, all classified within cash and other designations. Its concentrated approach means larger individual weights; top positions like Goldman Sachs 3.8% (03/15/30), JPMorgan Chase 4.493% (3/24/31), and Morgan Stanley 4.431% (1/23/30) each represent just over 1.5% of the fund. This tighter curation emphasizes investment-grade quality over breadth.

Neither fund employs leverage, currency hedging mechanisms, or structural complexity—both remain straightforward fixed-income vehicles. The distinction rests entirely on investment universe size and concentration tolerance.

The Yield Question in Today’s Bond Market

Income generation has become increasingly central to bond fund selection. FBND’s 40-basis-point yield advantage over FIGB compounds meaningfully over years. For a $100,000 investment, that translates to an additional $400 annually—modest individually but significant across portfolios.

However, this higher yield reflects FBND’s willingness to venture beyond pure investment-grade territory. While maintaining quality standards, its broader portfolio construction naturally captures slightly higher-yielding opportunities. FIGB’s premium focus on top-tier credit quality explains its more conservative payout, offering investors a clear trade-off: safety and stability versus income maximization.

Decision Framework: Which ETF Aligns With Your Goals?

Choose FIGB if: Your primary objective centers on capital preservation and minimal credit risk. The emphasis on investment-grade bonds appeals to conservative investors, those nearing retirement, or portfolios requiring predictable, lower-volatility components. While its tighter scope limits diversification benefits, it excels at providing a stable income foundation with reduced default probability.

Choose FBND if: You prioritize broader exposure, enhanced liquidity, and higher income generation. The substantially larger asset base means tighter bid-ask spreads and easier position scaling. If your investment horizon accommodates moderate additional volatility, FBND’s diversified composition and superior yield make it the more compelling proposition. Its lower beta suggests better insulation from equity market shocks—a genuine advantage during market stress periods.

Essential ETF Concepts

Exchange-Traded Fund (ETF): A pooled investment vehicle holding multiple securities, trading throughout the day like individual stocks while offering instant diversification.

Fixed Income: Investments generating periodic interest payments with principal repayment at maturity—the foundational income-producing asset class.

Core Bond Exposure: A broadly diversified fixed-income holdings strategy intended as a portfolio’s primary debt component.

Investment-Grade Bonds: Securities carrying lower default risk, typically issued by established corporations or governments, generally offering more conservative returns.

Dividend Yield: The annual income distribution divided by current market price, expressed as a percentage.

Expense Ratio: Annual operational costs charged by the fund, deducted from assets.

Assets Under Management (AUM): The total market value of all securities held within the fund structure.

Beta: Statistical measure quantifying price movement relative to the broader market, calculated using five-year weekly return data.

Maximum Drawdown: The largest decline from peak to trough during a specified timeframe.

Portfolio Diversification: Risk reduction technique spreading capital across numerous securities and holdings.

Leverage in Funds: Using borrowed capital or derivatives to amplify fund exposure beyond actual assets—absent in both these Fidelity offerings.

Currency Hedge: Protective mechanism reducing foreign exchange rate impacts on returns.

The Bottom Line

Both FBND and FIGB fulfill legitimate roles within Fidelity’s fixed-income suite. The choice ultimately depends on your investment objectives and risk tolerance. FIGB serves those prioritizing capital safety and quality assurance; FBND better serves investors balancing income needs with diversification requirements. With identical expense ratios, the decision hinges on whether you value concentration and credit quality or prefer broader exposure with superior yield potential and reduced market sensitivity.