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Opinions on HY Corp mutual funds

edited August 2011 in Fund Discussions
This recent correction hit high yield corporates mutual funds where they are now 5% below their 200 mda. Wondering if anyone is nibbling and if so which funds? I have owned:
PRHYX = T Rowe Price HY Bond fund


Tanks in advance for your input.


  • I was listing to a Doubleline conference call the other day. As I understand it, one can calulate an implied default rate in the bond price.

    1. Take the yield on the HY bond.
    2. Subtract the yield on a treasury bond with the same duration.
    3. Mutiply by 2 (assumes a 50% recovery on the defaulted bond.

    Is the implied default rate credible, based on your believes about the economy?

    This makes sense to me, but I do not have any training in finance or security analysis.
  • Reply to @Anonymous: It looks fishy to me. Here is a pretty good discussion of price implied default rate of bonds.
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