This Middle-of-the-Road Fund Is No Pretender
This Gold-rated, high-yield fund has a good long-term record and a strong management team whose approach is neither too aggressive nor conservative.
This Gold-rated, high-yield fund has a good long-term record and a strong management team whose approach is neither too aggressive nor conservative.
Sarah Bush: This week's Medalist of the Week is Fidelity High Income. Unlike many high-yield funds which focus either on more aggressive parts of the high-yield market or more conservative, this one takes a middle-of-the-road approach.
Manager Fred Hoff is focused on identifying companies with improving fundamentals over a two- to three-year period and mispriced. And as a result he tends to focus on the single B rated tranches of the market which are in the middle of that high-yield risk spectrum.
Now that focus doesn’t always pay off in the highest returns in the risk-taking markets that we've seen for most of the periods since the end of the credit crisis, but it has resulted in a really strong long-term record for this fund.
What we like about this fund moreover is Fred Hoff is an experienced manager with a lot of experience both as a manager and as an analyst, and he's backed by a deep team of analysts at Fidelity.
He focuses both on that company research, trying to figure out which companies have strong management teams and also trying to identify parts of the capital structures that are particularly attractive. Part of this fund's long-term record and the strength of its long-term record comes from his ability to navigate the difficult 2008-09 time period particularly well.
Now high yield is currently a part of the market where, like everything else, valuations are pretty tight, absolute yields are low, and spreads are tight, so investors should temper their expectations and be prepared for volatility.
All in all, this fund's strong management team, good long-term record, and sensible process merit Morningstar Analyst Rating of Gold.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals
and individual investors. These products and services are usually sold through
license agreements or subscriptions. Our investment management business generates
asset-based fees, which are calculated as a percentage of assets under management.
We also sell both admissions and sponsorship packages for our investment conferences
and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.