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Fidelity High Income Message Board

  • yankeesbuychampionships yankeesbuychampionships Dec 21, 2010 6:47 AM Flag

    Future of this Fund in 2011

    Anyone feel that this fund will continue to perform like 2010 or for that matter the junk bond market will stay above water too?

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    • This fund seems to outperform all other junk bond funds, and according to the long history, should continue to. I wanted to transfer to the vanguard one, VWEHX, since its expenses are .5% lower than SPHIX, but I just can't due to the performance difference, which is significant. How it outperforms its vanguard equivalent with such higher expenses (and lower dividend rate) is beyond me, but, the stats don't lie.
      The only caveat to the above is, if the economy goes into a tailspin, it seems SPHIX goes down faster than VWEHX. But I don't expect that to happen in 2011.
      I find high-yield bond funds to be a good investment that lies exactly between bond funds and stock funds. It won't decline as fast as an equity fund in times of trouble, but outperforms bond funds in the good times. It's a good diversification vehicle in that regard. Wonder if there's an international junk-bond fund or etf out there.

    • The fund did well, although its modest position in foreign bonds held the fund back but it should continue to do well in 2011.

    • The baby boom retirees are increasing and seeking a source of steady income. That demand will dampen inflationary forces on share price. Even if the share price is impacted, the yield will be steady or increase with inflation, which will be a key factor to those seeking a good return and steady income.

      • 1 Reply to nunzio_tideview
      • It depends . . . on the Fed interest rates.
        In the extreme, if the Fed discount rate goes to over 20 percent as it actually did in the 1980's, the capital value of the fund will, over time, drop significantly even though the dividend may be, but not likely, nearly the same.

        The benefits of every mutual fund, capital value plus income, are reflective of economic market opportunity. Just refer to year 2007-2008.

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