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Lots of Junk Bond in Fidelity Retirement Fund
Old 04-04-2015, 04:20 PM   #1
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Lots of Junk Bond in Fidelity Retirement Fund

I'm amazed the Fidelity Freedom Fund 2025 https://fundresearch.fidelity.com/mu...tion/315792663 has it's fixed income invested in low quality, moderate sensitivity bonds. This seems like high risk in a retirement fund. By comparison, Fidelity Balanced Fund https://fundresearch.fidelity.com/mu...tion/316345206 has it's fixed income invested in medium quality, moderate sensitivity bonds.

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Old 04-04-2015, 04:52 PM   #2
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When looking at the individual bond fund holdings my quick calculations indicate about 20% of the bonds in the 2025 fund are junk. About 8% of the balanced fund bonds are junk. I have read that you should keep your junk bond holdings in the 10% range. However in this low rate environment many are reaching for yield. Evidently Fidelity is doing likewise.
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Old 04-04-2015, 10:49 PM   #3
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I do not see what you do... high yield is less than 4%.... I do not see how much of investment grade is high yield, but I bet zero %....

Nothing strange that I see here....

Bond Funds
23.94%

Investment-Grade Bond Funds
18.42%

Fidelity Series Investment Grade Bond Fund
18.42%

Inflation-Protected Bond Funds
0.00%

Fidelity Series Inflation-Protected Bond Index Fund
0.00%

High-Yield Bond Funds
3.95%

Fidelity Series High Income Fund
3.95%
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Old 04-05-2015, 06:18 AM   #4
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I was referring to the Fixed Income StyleMap in the center column of the Fidelity Freedom 2025 page that I linked to above, quoting:

Low Quality Moderate Sensitivity

Hold securities with a low asset-weighted average credit rating and a moderate sensitivity to interest rate changes as defined by the fund's effective duration, both according to Morningstar's rating system.
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Old 04-05-2015, 07:58 AM   #5
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Quote:
Originally Posted by Texas Proud View Post
I do not see what you do... high yield is less than 4%.... I do not see how much of investment grade is high yield, but I bet zero %....

Nothing strange that I see here....

Bond Funds
23.94%

Investment-Grade Bond Funds
18.42%

Fidelity Series Investment Grade Bond Fund
18.42%

Inflation-Protected Bond Funds
0.00%

Fidelity Series Inflation-Protected Bond Index Fund
0.00%

High-Yield Bond Funds
3.95%

Fidelity Series High Income Fund
3.95%
Hi Yield plus the % of junk also held in Floating Rate, EM and RE. totals around 5% of total holdings. However since bonds are 23.94 % of the funds, the portion of the bond holdings which are junk is approx 20%.
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