Fidelity files a new short-duration income ETF, separate from its short-term bond fund
A quantitative process would rank the bonds, duration would stay at three years or less, and up to 25% of assets could sit in lower-quality debt.
Key takeaways
Fidelity filed on Thursday to register Fidelity Short Duration Income ETF, a new fund that would rank bonds with a quantitative process and would not share the portfolio of Fidelity Short-Term Bond ETF FSTB.
The preliminary prospectus, dated Oct. 22, 2026, is for a new series of Fidelity Merrimack Street Trust. A series is its own fund, with its own portfolio.
The filing proposes to become effective 83 days later, on Jan. 13, 2027, at 5:30 p.m. Eastern time. The cover says the information is not complete and may be changed, and that the shares may not be sold until the registration is effective.
What the new fund would hold
The stated objective is to seek "a high level of current income consistent with preservation of capital."
The fund would normally invest at least 80% of assets in debt securities of all types and in repurchase agreements for those securities. It would normally keep duration, a measure of interest-rate sensitivity, at three years or less. It would use the Bloomberg U.S. 1-3 Year Corporate Bond Index as a guide for credit quality and risk, and compare its results with that index and with the Bloomberg U.S. Aggregate Bond Index.
The prospectus says the fund would allocate across investment-grade, high-yield and emerging-markets debt. It may invest up to 25% of assets in lower-quality debt, which it defines as below investment grade and also calls high-yield.
Security selection, the prospectus says, is driven primarily by a proprietary quantitative process that ranks securities on factors designed to find income while managing interest-rate, credit and liquidity risks. Those factors can include valuation, quality and momentum. The process seeks income and return above the corporate index.
The prospectus names Rahul Bhargava, Orhan Imer and Leo Landes as co-portfolio managers, and says each has managed the fund since 2026, the year of this filing. Fidelity Management & Research Company LLC would be the adviser. Bhargava joined Fidelity in 2024, Imer in 2022 and Landes in 2025. The ticker and the management fee are blank. The named listing exchange is Cboe BZX Exchange.
Not a share class of the fund already trading
FSTB is an exchange-traded share class of Fidelity Short-Term Bond Fund, a mutual fund in Fidelity Salem Street Trust. A share class is another way to buy a fund that already exists, so the ETF holds that mutual fund's portfolio and record.
Fidelity said on June 15, 2026 that the class would begin trading on June 18, 2026, on Nasdaq, sharing the portfolio, the record and the managers. A Fidelity Q&A citing the prospectuses dated June 12, 2026 lists a gross expense ratio of 0.21% and a net expense ratio of 0.20% for the ETF class.
That June 12 prospectus says the fund normally invests at least 80% of assets in investment-grade debt securities. It also says the adviser may invest in lower-quality debt, and it states no limit. The benchmark named there is the Bloomberg U.S. 1-3 Year Government/Credit Bond Index.
The prospectus names Robert Galusza, David DeBiase and John Mistovich. Fidelity's fund page says Mohak Rao became a co-manager on Oct. 1, 2026.
Thursday's fund would not inherit the mutual fund's record, and the filing does not change FSTB.
Three short-duration bond ETFs charge 0.15% to 0.25%
BlackRock's iShares Short Duration Bond Active ETF NEAR lists an expense ratio of 0.25%. iShares reported effective duration of 1.98 years as of Oct. 15, 2026. Eaton Vance Short Duration Income ETF EVSD charges 0.24%. Vanguard Short Duration Bond ETF VSDB reported an expense ratio of 0.15% and average duration of 2.6 years as of June 30, 2026.
Each duration was measured on a different day, and each is inside the three-year cap the new prospectus sets. The new fee table leaves the management fee blank. Until Fidelity fills it in, and until the registration is effective, the filing is a proposal, not a fund a buyer can own.
Want more of our stories in Google’s Top Stories? Add etf.net as a preferred source on Google
