Fidelity Global High Income Fund (FGHNX) seeks to tap into the income potential of fast-growing countries and companies around the world. The fund aims to deliver high current income, and potentially capital appreciation, from investing primarily in high yield, lower quality issuers based in the United States, Europe, and Asia, as well as in issuers from emerging markets.
- The fund invests primarily in income-producing debt securities, preferred stocks, and convertible securities from domestic and foreign issuers.
- Security selection for the fund emphasizes lower quality, high yield debt, from the types of corporate and government issuers that lack the operating history or balance-sheet strength to merit an investment-grade credit rating from major rating agencies.
- Issuers include those from the United States, as well as from emerging and developed foreign markets.
The fund's strategy offers investors the potential for reduced volatility, when compared to an investment in, for example, a strictly U.S. high yield debt fund. The four markets respond to different economic factors, and thus changes in their performance have the potential to offset each other and mitigate the volatility of the overall portfolio.
The Global High Income Fund also potentially offers reduced volatility when added to an all-stock portfolio, for similar reasons: the fund's significant sub-portfolios have also historically performed differently from equities.
The fund can also potentially offer higher returns—with likely more volatility—when compared to investment-grade bond funds with a lower risk and return profile.
Who may want to invest
The Fidelity Global High Income Fund may be appropriate for risk-tolerant investors whose primary objective is to pursue high current income through a fund managed by a team of Fidelity portfolio managers and research analysts using a disciplined strategy to invest in high yield issuers globally, as well as emerging markets debt.
The fund may also be appropriate for risk-savvy investors seeking to diversify a stock portfolio, or to increase the return potential of an investment-grade bond portfolio using an aggressive bond fund.
Things to keep in mind
Although bonds generally present less short-term risk and volatility than stocks, the bond market is volatile and investing in bond funds involves interest rate risk; as interest rates rise, bond prices usually fall, and vice versa. Bond funds also entail issuer and counterparty credit risk, and the risk of default (the risk that an issuer or counterparty will be unable to make income or principal payments). Additionally, bond funds and short-term investments generally involve greater inflation risk than stocks, since investment returns may not keep up with increases in the prices of goods and services.
Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Lower-quality debt securities [generally offer higher yields, but also] involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
Investments in foreign securities, especially those in emerging markets, involve risks in addition to those of U.S. investments, including increased political and economic risks as well as exposure to currency fluctuations.
Each of the fund's investment categories may experience periods of volatile returns, and it is possible for all investment categories to decline at the same time.