The daily price drops in this fund are just plain ridiculous. It is not the manager's fault, rather, those who feel that they are rats jumping off of a sinking ship. I agree with previous posts that the debt held in this fund is within reason. However, as people cash out, the manager is forced to sell assets, and in these times of illiquidity, these sales happen at a loss, hence the drop in share price. The buyers of these securities are getting a good deal at (our) shareholder expense. Was there a newsletter somewhere that told people to bail? Again, look at the chart -- this fund was a steady eddie. Now, my fellow shareholders are taking into the crapper. Thanks, guys.
You're right. Unusually high selling pressure can cause a shortage of cash, resulting in the fund having to sell depressed securities in order to meet the demand for cash. This of course makes the fund go down. But I don't think this is the case here. Nor is it the actual or impending default of any of the underlying securities. The charts for other funds in the sector are almost mirror images of this fund. The whole sector is sucking. I think it's simply an oversupply of junk notes on the market and too little cash chasing them. And the sub prime mess hasn't helped the banking industry as a whole. No one can really tell just how bad it is. On the brighter side, Bill Gross of PIMCO thinks junk bond funds will become attractive later in the year.
It's gut wrenching to follow this fund on a daily basis. But if you're an income investor with a long term horizon, you can only hope it will come back. What's disappointing is that Fidelity doesn't come out with some sort of statement explaining what's going on. All you get from them if Pablum. I wasn't a Fidelity fan before. I am much less of one now.
I'm preparing to take legal action against Fidelity over this fund. I plan a major suit against the fund manager and representatives of Fidelity. Further, I have filed a complaint with the SEC. I suggest all shareholders of this fund do the same. There is corruption deep in Fidelity and there will be people who will go to jail over their behavior.