Fidelity High Income Fund - Should I fear?

[dex]

Quote:

Originally Posted by dex Two things I think you need to research. 1. How does it trade versus stocks - look at the charts - same as or different? 2. What is the interest rate spread versus compritable length US government bonds? Is the risk justified? Let us know what you find out.

I was suggesting looking at the chart for the s&p and the junk fund to see if the junk fund has a positive, negative or neutral correlation to stocks. I haven't looked at the chart.

Others has stated, as I believe, that the price premium between junk and US bonds does not justify the risk.

I have junk funds on my buy list --- when the price premium warrents it.

[CMAN]

This is a very timley thread. I was about to put a portion of my Fidelity IRA into Fidelity High Income Fund. What Fidelity Bond fund would you consider at this point as a risk stablizer. I have a portion of my bond investment in Fidelity Floating Rate High Income and Loomis Sayles Bond Istl( also corp bonds). I have been looking at Fidelity Strategic Income. I felt that this would give me enough of a spread between different bond funds. Your thoughts

[d]

i too would welcome thoughts on fidelity floating rate and strategic income ...

[Gone4Good]

Quote:

Originally Posted by brewer12345 The VG fund is less junky than most junk funds. So the downside risk should be less. However, the stuff the fund holds has been bid up foolishly like everything else, so you are still buying an overvalued asset class.

For sure.

All these monster LBO's you keep reading about still need to be financed. The latest, TXU, will need nearly $30B in new debt financing. One of these over leveraged pigs is going to get hung in the market and then . . . look out below!

[terminator]

I looked at the above Fidelity funds and ended up going with the U.S. Bond Index (FBIDX). The credit quality on Floating Rate is basically *all* BB rated and below and has a current annual yield of 6.5%. Strategic income pays 5.4% currently and has about 40% BB rated or worse. Whereas the U.S. Bond Index Fund is at 4.99% and is 67% government issuances and everything is BBB or better (about 90% is A or better).

At these rates with such a small risk premium spread between U.S. debt and junk (and AAA corporate for that matter), I considered just buying some short to mid term T-notes and/or TIPS, but I just decided that FBIDX worked for me and went with that for now. I'd echo what has already been said about junk being overpriced now. Government at 4.75%, AAA at 5.25% and junk at 6.5% is a no-brainer choice for one of the former two IMHO.