The low money market rates have caused huge inflows OUT of money market funds into bond flows.
I just checked the latest rates in my Fidelity IRA= FDRXX (Cash reserves money market) 7 day yield= 0.38%
Because of this low rate, I started scaling out of FDRXX a few months ago into FSICX (Fidelity Strategic Income Fund) with a 30-day yield of 6.35%. I chose FSICX because it does not have an exit redemption fee. Fidelity's junk bonds all have 90 day exit redemption fees.
>>>Is there any way to know given the NAV what the implied expected default rate is? That would help give some indication of how much upside there is to NAV growth<<
Getting into the realm of default risk and duration analysis is not my cup of tea because mathematics is involved. But maybe to your question this fund's NAV or any fund's NAV is impacted by four basic factors - recessionary fears, default rates, fund flows, and the spreads between junk bonds and the 10 year Treasuries. At any one time one or more of these factors can be the main driver to NAV. Right now I believe the main driver are the very heavy and consistent inflows (money coming into junk bond mutual funds) as that is buoying the heavy demand for individual issues and enabling companies to roll over their debt. Fund flows in the junk bond market are much more integral to junk performance than fund flows into equities and for reasons that would take me awhile to explain. So much for all my rambling, the bottom line with junk bonds has always been trend perisistency and momentum and right now that appears to be tilted like never before in favor of the bulls.