Fidelity's high-yield fund favours distressed debt

Move aims to give downside protection to capital at expense of headline income

Fidelity's high-yield fund is favouring distressed debt as a defensive play, a move designed to give downside protection to capital albeit at the expense of headline income. The group is favouring distressed debt in the high yield arena as it believes many of the stocks expected to default may have more upside potential than downside. Andrew Jenkins, group leader of fixed income at Fidelity International, said that expected default is priced into many of these bonds and they often trade below the liquidation value of the company. He pointed out that NTL is priced as if it were about ...