The co-managers of the fund will be Peter Khan and Ian Spreadbury, with Khan the lead manager.
He has worked at Fidelity since 2000, within the fixed income team, and manages a number of segregated mandates for institutional clients.
Ian Spreadbury joined Fidelity in 1995 and has over 30 years of investment experience; he already manages the Fidelity MoneyBuilder Income, Strategic Bond and Extra Income funds.
Fidelity said while high yield bonds are perceived to give volatile returns, historically the asset class has shown lower levels of volatility than equities.
It cited statistics from JP Morgan which showed the asset class has only displayed a negative total return in four of the past 25 years.
Now is the best time for a launch of a high yield fund, the firm added, because there are signs of deterioration in creditworthiness in the market, which has led to greater dispersion among issuers and sectors.
"It is times like these that high yield bonds can deliver very attractive returns. Historic evidence points to high yield assets delivering their strongest returns during economic downturns and in the early stages of the cyclical recovery," Fidelity said.
Khan added: "Banks’ limited appetite to roll over loans is likely to continue, encouraging more companies to seek funding in the bond market. The move away from loans into high yield bonds has been a major trend in the past three years and it is expected to continue, especially throughout Europe."
The details
The fund will invest mainly in BB and B rated bonds and aims to participate strongly in up markets and also to outperform during down markets.
It will have an unconstrained mandate of around 150 holdings, and may include some CCC credits if they offer an attractive risk-reward proposition.
The fund is a UK domiciled Oeic and will sit in the IMA High Yield Sector. Its comparative index is the BoAML Global High Yield Constrained Index (£ hedged) but the fund will not be constrained in its regional allocation.
It will be fully hedged to sterling and has a minimum investment of £1000 for the A share class (AMC 1.25%) and £500,000 for the Y share class (AMC 0.75%).
