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Spreadbury unleashes 150 best ideas for high yield fund

by Emma Dunkley on Feb 28, 2012 at 09:30

Spreadbury unleashes 150 best ideas for high yield fund

Fidelity is to unveil an unconstrained, global high yield fund for Peter Khan and Citywire A-rated and Selection star-pick Ian Spreadbury.

The new vehicle will launch on 19 March, subject to the regulator's approval, and will offer investors access to around 150 of Khan and Spreadbury's best high conviction ideas.

Fidelity Global High Yield will invest primarily in BB and B-rated credits, with the opportunity to include some CCC credits where the managers see an attractive risk-reward offering.

The launch comes at a time when UK 10-year gilts are yielding only 2% and as interest rates are expected stay at record lows of 0.5%.

Fidelity said there is a perception returns from high yield bonds are more volatile, although the asset class has historically shown lower levels of volatility than equities. The group added the majority of the total return from high yield bonds has come from income while the average sub-investment grade bond yields approximately 8%.

Khan, lead manager on the fund, is regarded as highly experienced in the high-yield market, having started his career as a fixed income trader with a specialism in high yield bonds.

Khan believes that banks’ limited appetite to roll over loans looks set to continue, which will encourage 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 throughout Europe,' the manager explained. 

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

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