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This fund aims to provide a combination of capital growth and income. This be higher than that of the ICE BofAML Global High Yield Index (GBP Hedged) over any five-year period. At least 80% of the fund is invested in high yield bonds issued by companies from anywhere in the world. This includes emerging markets.
It may also invest in government bonds and investment grade corporate bonds. The investments are selected based on in-depth analysis of individual bond issuers. This is combined with an assessment of global, regional, and country-specific macroeconomic factors. The fund has a Distribution yield (%) of 5.44% at the expense of a 0.58% ongoing charge and 0.3% transaction fee.
The fund uses a bottom-up security selection approach. This is based on assessing relative value across the global developed market high yield credit. This fund is in Fidelity’s select top 50 funds. That’s partly because this fund has a Distribution yield (%) of 5.7%. In exchange for an ongoing charge of 0.62% and a transaction fee of -0.11% you get a portfolio of 495 bonds and 14 equities.
The funds main investment exposure is to invest at least 80% of assets invested in below investment grade corporate debt securities from issuers in developed markets. The Fund may also invest in debt securities of issuers of emerging market countries and unrated debt securities. Other investment exposures Up to 5% in contingent convertible bonds.
The Bond quality is primary < BBB (95.1%) that’s because the fund focuses predominantly on Corporate Bonds (98.7%) with an average maturity of 5 years, with a yield to worst of 6.4%. Over 90% of these bonds are in the United States.
The Fund invests a large portion of its assets in short maturity sub-investment grade bonds. Which are lower credit quality bonds. The bonds are issued by companies domiciled in the UK, Europe, Africa, Asia and the Americas. According to the fund factsheet (Nov-2022) 50.4% of the bonds are rated B, 42.6% BB and 5.8% B.
These held an average weighting coupon of 5.74% which is inline with the historical distribution yield of 4.84%. The Fund may also invest in short maturity investment grade securities. Which are higher credit quality.
As a result, It may invest in short maturity bonds issued by European governments and government related agencies. As of the end of December 2022, United States Treasury bills were the funds 3rd top holding (1.77%). The fund has a 0.59% ongoing charge and a transaction cost of 0.08%.
#4 Schroder High Yield Opportunities Fund Z Income GBP
The Fund aims to provide income and capital growth of between 4.5% and 6.5% per annum (after fees have been deducted) over a three to five year period. This fund has overachieved in its objective with Distribution yield (%) of 7.28% and an underlying yield of 4.82%. This comes at the expense of a 0.72 ongoing charge and 0.23% transaction charge.
The fund invests in fixed and floating rate securities worldwide, with 80% of its assets in fixed and floating rate securities. Which are issued by governments, government agencies, supra-nationals and companies worldwide. In fact, 80% of these bonds are in below investment grade securities (as measured by Standard & Poor’s or any other equivalent credit rating agencies) or in unrated securities.
The fund aims to generate income and some growth over the long term (5 years or more) with a performance target of 3% plus 0.8% per annum over rolling three year periods. This is expected to be in line with the return of the ICE BofA GBP/ Euro Fixed & Floating High Yield Non Financial 3% Constrained (Hedged to GBP). To date the fund has Distribution yield (%) of circa 5% which means it has outperformed it’s performance target.
The fund will invest at least 70% in Sterling and Euro denominated sub-investment grade corporate bonds. The fund may also invest in bonds issued anywhere in the world by governments and corporations. Including sub-sovereigns and the following types:
- investment grade bonds
- inflation-linked
- convertible
- asset backed and mortgage backed securities.
This fund has a Distribution yield of 6.24% at an ongoing charge of 0.61% and a transaction fee of 0.29%. This enables to fund to provide a combination of income and capital growth over any 7 year period. As a result, 66% of the bonds in this fund have a maturity of 3 to 7 years.
At least 80% of the Fund will be invested in a portfolio of high yield corporate bonds issued anywhere in the world. denominated in any currency. At the time of writing, 29.9% of the fund was invested in the United States, 23% in the United Kingdom.
These high yield corporate bonds have credit rating defined as Ba1 or below. The ratings are issued by Moody’s or BB+ or below by Standard and Poor’s or BB+ or below by Fitch or their respective successors or equivalents. High yield bonds also include non-rated instruments.
The aim of the Fund is to provide long-term high income combined with any capital growth. No less than 70% of its assets in this diversified portfolio include high yield bonds. These can be issued by companies anywhere in the world. The fund’s portfolio of bonds have an Avg wtd coupon of 5.72 with an average credit quality of B.
The fund has a Current yield (%) 6.78 and a yield to worst of 9.59%. This is roughly in-line with it’s benchmark; the ICE BofA Developed Markets High Yield Constrained Index (HYDC). This fund comes at the expense of an 0.57% ongoing fee and a 0.49% transaction fee, making this a relatively expensive fund
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