Fidelity Capital & Income Fund Q1 2025 Review

2025-05-07 00:30:00 ET

Summary

• Fidelity Capital & Income Fund is a diversified high-yield bond strategy that seeks income and capital growth by investing primarily in the bonds of non-investment-grade companies.
• For the quarter, the fund returned -1.30%, lagging the 0.94% gain of the ICE BofA US High Yield Constrained Index.
• As the second quarter begins, the portfolio reflects our analysis of relative valuations for stocks and high-yield debt.

Investment Approach

• Fidelity® Capital & Income Fund is a diversified high-yield bond strategy that seeks income and capital growth by investing primarily in the bonds of non-investment-grade companies.
• We apply an opportunistic investment approach, which results in tactical positions aimed to capitalize on relative value across a company's capital structure, including high-yield bonds, stocks, convertible securities, leveraged loans and preferred stocks.
• In particular, we seek companies with a strong balance sheet, high free cash flow, improving business/industry fundamentals and a sharp management team that is motivated to reduce debt. In doing so, we take a longer-term investment outlook and also may take advantage of opportunities based on the credit cycle.
• We strive to uncover these investments through in-depth fundamental credit analysis, working in concert with Fidelity's high-income and global research teams.

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