Investors who buy bonds online can do a Fidelity bond search and execute trades with the click of a few buttons. Bond investing has come a long way over the last 20 years, and Fidelity has been at the forefront of developing user tools to make bond investing efficient and transparent. All bond investments on the Fidelity.com site begin with a Fidelity bond search.
How To Do a Fidelity Bond Search if You Know the CUSIP
If you purchase BondSavvy's investment newsletter subscription, we provide you a list of recommended bonds, including a detailed presentation discussing our rationale for the investment, an overview of the issuer's business, and an analysis of the company's financials, capital allocation, and business momentum. We also provide you with a CUSIP, which is a nine-digit number that identifies the bond you are buying. It's an acronym for "Committee on Uniform Securities Identification Procedures," and if that doesn't get you jazzed up about investing in bonds, we don't know what will.
Bonds need CUSIPs since companies issuing bonds will often issue a number of bonds. Companies can get away with only have one stock ticker symbol since only one stock of most companies trades. In bonds, however, investments are identified by CUSIP numbers. If you have the CUSIP, all you need to do is log into Fidelity and then do the following:
- Click "Accounts & Trade" and then select "Trade" from the drop-down menu
- In the "Trade" screen, you will click the "Fixed Income" button on the menu right below the word "Trade"
- Enter the CUSIP when prompted on the next screen and indicate if you want to buy or sell bonds
After these three steps, you will arrive at the order ticket where you will enter the number of bonds you want to buy or sell and the limit price at which you want to buy or sell the bonds. Within a few more seconds, your trade will be executed.
How To Do a Fidelity Bond Search if You Don't Know the CUSIP
If an investor doesn't already know the corporate bond's CUSIP, he or she will need to do an online bond search. The first two steps of a Fidelity bond search are the same as for when you know a bond's CUSIP, but there are a few more steps you need to take if you do not know the bond's CUSIP. Here's a full walk-through of conducting a Fidelity bond search when you do not know a bond's CUSIP:
- Click "Accounts & Trade" and then select "Trade" from the drop-down menu
- In the "Trade" screen, you will click the "Fixed Income" button on the menu right below the word "Trade"
- Click the "Search Inventory" hyperlink
This will take you to a page titled "Fixed Income, Bonds & CDs" and you then have several options to further narrow your search:
Fidelity bond search when you know the issuer you want to search:
- In the box labeled "By CUSIP or Type (for bond name)" select "Corporate" from the drop-down menu
- You then enter the issuer's name in the "Search for Corporate Bonds" box
There are a few caveats with which you should be aware when you enter a bond issuer's name. If the bond is issued by a company that hasn't assumed debt of an acquired company, your search is straightforward. For example, if you search "Apple" you will find all of the bonds issued by Apple Inc. as, to the best of our knowledge, Apple has never assumed the debt of an acquired company. Companies with more than $200 billion in cash can do that.
Where things get somewhat trickier is when one company buys a number of other companies and assumes the debt of those other companies. For Fidelity bond search purposes, the original bond issuer will keep its name. Therefore, if you conduct a Fidelity bond search for "Company ABC" and that company had bought Company XYZ, a search for Company ABC would not return the bonds of Company XYZ. When BondSavvy analyzes the bonds of different companies, we know what companies it has acquired and can search for bonds of issuers who all fall under the same parent company.
Fidelity bond search when you do not know the issuer you want to search:
- Go about three-quarters of the way down the page, and you will see a menu with six choices: US Treasury, CDs, Agency/GSE, Municipal, Corporate, and All Offerings. Click "Corporate"
- Then click either the "Investment Grade (Secondary)" or "High Yield (Secondary)" hyperlink based on the credit ratings you would like to search
While online brokerages allow investors to search based on bond ratings, we do not believe investors should use bond ratings as a material part of their investment analysis. Bond ratings often don't correctly evaluate a bond's creditworthiness due to their flawed methodologies. In addition, bond ratings do not speak to whether a bond is a good investment, as they ignore the price, yield, maturity, and interest-rate risk of a bond.
When BondSavvy conducts a Fidelity bond search, we like to see as many bonds in the search results as possible, so we try not to 'over-filter.' The reason we do this is, even if we may not recommend bonds within a certain sector, it's helpful for us to know the yields to maturity and bond prices of a wide variety of corporate bonds so we can assess the value of various corporate bonds in which to invest.
You now know how to do a Fidelity bond search.
Please note there is no legal affiliation between BondSavvy and Fidelity. BondSavvy has, on previous occasions, been invited by Fidelity to participate in investor education webinars focused on corporate bond investing.
