Fidelity Worldwide Investment will launch the Fidelity Global High Yield Fund on March 19, subject to FSA approval. The fund will comprise an unconstrained portfolio of around 150 credits – mostly rated single and double B – although there is also some scope for the fund to invest in triple-C credits. The fund will be co-managed by Peter Khan and Ian Spreadbury, who will be supported by the firm’s credit and equity research teams.

The new fund is a UK-domiciled OEIC and will sit in the IMA Sterling High Yield sector. The comparative index is the BoA ML Global High Yield Constrained Index (sterling hedged), however the fund will not be constrained in its regional allocation and will be fully hedged to sterling to eliminate the effects of currency fluctuations. Derivatives and forward transactions may be used for investment purposes. The minimum investment is £1,000 for the A share class and £500,000 for the Y share class. Income distributions are monthly.

Comparing the performance of high-yield to equities over the last 25 years, a press release from the company comments that high-yield has seen half the volatility of equities during that period, and a negative total return has occurred in only four of the last 25 years. Furthermore, the company comments that “historic evidence points to high-yield assets delivering their strongest returns during economic downturns and in the early stages of the cyclical recovery.” – Luke Millar