Fidelity Worldwide Investment to launch Global High Yield Focus Fund

Fidelity Worldwide Investment is expanding its fixed income range of high yield funds with the launch of the Fidelity Funds - Global High Yield Focus Fund.
The new fund offers investors a portfolio of approximately 150 high conviction ideas primarily in BB and B rated credits, with the opportunity to include CCC credits where they offer an attractive risk-reward proposition.

The fund will be co-managed by Peter Khan and Ian Spreadbury, supported by one of the world´s largest credit and equity research teams on the buy-side. Lead manager Peter Khan has a wealth of experience in the high yield market, having begun his career as a fixed income trader with a specialism in high yield bonds.  Ian Spreadbury, meanwhile, is one of the most experienced and highly regarded fixed income managers in the industry as manager of Fidelity MoneyBuilder Income Fund and Fidelity Strategic Bond Fund*.

Why high yield?
While there is a perception that returns from high yield bonds are more volatile, the asset class has historically shown lower levels of volatility than equities – in fact, half the volatility over the last 25 years.  Indeed, a negative total return has occurred in only 4 of the last 25 years**.

Looking back over the last 25 years, high yield bonds have delivered stronger risk-adjusted returns than the other major asset classes.  The majority of the total return from high yield bonds – in fact, over 100% over the long term – has come from income. Today, the average sub-investment grade bond yields approximately 8%***. 

Why now?
There are signs of deterioration in creditworthiness already showing, which has led to greater dispersion among issuers and sectors, but those companies with utility-like cash flows, healthy margins and a degree of pricing power should serve investors prioritising capital preservation well.

It is at times like these that high yield bonds can deliver very attractive returns.  Historic evidence points to high yield assets delivering strongest returns during a period of slow economic growth or as as during the early stages of the cyclical recovery.

Peter Khan, Co-Manager of Fidelity Funds – Global High Yield Focus Fund, comments: “Banks’ limited appetite to roll over loans is likely to continue, encouraging more companies to seek funding in the bond market.  The move away from loans into high yield bonds has been a major trend in the last three years and it is expected to continue, especially throughoutEurope.

“Low interest rates should also continue to increase the investor base for higher yielding assets, which will help to absorb the new supply.  And, assuming the economy avoids recession, it should foster strong demand for higher yielding products and good, but volatile, new-issuance conditions.

“By investing mainly in BB and B credits, the fund should participate strongly in up markets but also outperform during down markets.”

A Global High Yield Focus fund is the natural extension of Fidelity's fixed income range. Peter Khan and Ian Spreadbury's combined experience in High Yield credit and risk management further strengthen the proposition at a time when the asset class looks attractive for investors.

About the fund
The index of the fund is BoA ML Global High Yield Constrained Index****. The fund has monthly and annual distributing share classes. The yield produced by the fund will be product of current market high yield market conditions and the investment profile of the fund.  Therefore, over time and throughout a full market cycle the yield may change. 

Generally, our funds are suitable for someone who is prepared to invest their funds in the high yield bond market and who is prepared to save over the medium to long term (3-5 years or more). They are not suitable for someone who is not prepared to take any risk with their capital or for someone who is likely to want to cash in their investment within 3-5 years.

 * Not available to investors in the Nordic region
** Source: JP Morgan, November 2011
*** Source: Datastream as at 31.12.11
**** Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only.

For more information on the fund or if you would like to talk to the fund managers – please contact Maria Zachrisson or Petter Edwinson, Fidelity Worldwide Investment.

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We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus, which is available along with the current annual and semi-annual reports free of charge from our distributors, from our European Service Centre in Luxembourg and from your financial advisor or from the branch of your bank. Past performance is not a reliable indicator of future results. The value of investments [and the income from them] can go down as well as up and investors may not get back the amount invested. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of an investment.  Foreign exchange transactions may be effected on an arms length basis by or through Fidelity companies from which a benefit may be derived by such companies. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity. The research and analysis used in this documentation is gathered by Fidelity for its use as an investment manager and may have already been acted upon for its own purposes.
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