Fidelity Advisor Strategic Income Invests in a Tepid Economy
The fund has evolved a bit over time, and is positioned to do well in a moderately growing U.S. economy.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

The bond market has been perplexing of late. When Treasuries do well, higher-risk bonds, such as corporate debt, typically lag. Not this year. Both bond sectors have rallied recently. Cuts in U.S. short-term interest rates propelled Treasuries (interest rates and bond prices move inversely), while a low simmer in the U.S. economy drove corporate bonds higher.
The Bloomberg Barclays U.S. Aggregate Bond index, which is loaded with Treasuries and high-quality corporate debt, gained a whopping 11.5% over the past 12 months through October 31. Unfortunately, that makes it tough for many bond funds to look good by comparison. Fidelity Advisor Strategic Income (symbol FSTAX (opens in new tab)), delivered an 8.4% return, which in any other year would be considered a banner performance.
The multisector fund, a member of the Kiplinger 25, balances government securities with junkier, higher-yielding debt to deliver a fatter income stream than the Agg index. The fund currently yields 3.21%, compared with a 2.29% yield for the Agg. "It's rare for a fund with a yield in the mid threes to generate 8% to 9% returns," says Ford O'Neil, who, with Adam Kramer, makes the broad calls on which sectors of the bond market to emphasize or underplay. Specialists within each sector do the bond picking.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
These days, the managers have positioned the fund to do well in a moderately growing U.S. economy. O'Neil and Kramer start with a target of 40% of assets in high-yield bonds; 25% in U.S. government securities; 15% each in foreign-developed and emerging-markets debt; and 5% in floating-rate loans. Then they tweak the proportions depending on their big-picture view. Currently, the fund is tilted toward high-yield debt (42% of assets) and floating-rate loans (nearly 9%). "If we can grow at 1.5% to 2%, that's good news for the bonds that we favor today," says O'Neil.
The fund, which recently celebrated its 25-year anniversary, has evolved a bit over time. O'Neil added a sliver of stocks to the high-yield portion of the fund seven years ago to reduce overall volatility. Shares in Air Canada, the fund's largest stock holding, have climbed 47% over the past six months.
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
-
Stock Market Today: Stocks Rise Ahead of Next Inflation Update
The major indexes notched modest gains for a second straight day.
By Karee Venema • Published
-
How to Choose a Money Market Account
Here’s what to consider when you choose a money market account — an interest-bearing account that usually offers higher interest rates than traditional savings accounts.
By Erin Bendig • Published
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune • Published
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley • Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson • Published
-
10 Bond Funds to Buy Now
Investing for Income Bond funds have seen sizable losses so far this year, but yields are now rising to attractive levels for income-starved investors.
By Adam Shell • Published
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson • Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang • Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang • Published
-
Do You Have Gun Stocks in Your Funds?
ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
By Ellen Kennedy • Published