FFRHX Fact Sheet Explained_ What This Mutual Fund Offers

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FFRHX Fact Sheet Explained: What This Mutual Fund Offers

Feature

Details

Fund Name

Fidelity® Floating Rate High Income Fund

Ticker Symbol

FFRHX

Fund Category

Bank Loan (Floating Rate)

Inception Date

October 6, 2000

Minimum Investment

$2,500 (standard brokerage account)

Expense Ratio (Net)

0.68% (as of June 2025)

Distribution Frequency

Monthly

Net Assets

$10.54 Billion (as of May 31, 2025)

Benchmark

Morningstar LSTA US Leveraged Loan Index

Fund Type

No-load, actively managed

Lead Managers

Jeff Moore (since 2003), Michael Plage (since 2007)

Share Class

Retail (Investor Class)

Yield (30-day SEC)

8.16% (as of May 2025, subject to change with rate movements)

Understanding What FFRHX Is All About

FFRHX stands for Fidelity Floating Rate High Income Fund. It’s a mutual fund that specializes in senior secured loans—floating-rate loans issued by companies with lower credit ratings. These loans reset their interest rates periodically, usually every 30 to 90 days, making them more resilient in a rising interest rate environment.

The fund appeals to investors who want consistent monthly income without locking into long-term fixed rates. Because of its structure, FFRHX is less vulnerable to interest rate risk than most traditional bond funds.

Key Information About the Fund

  • Fund origin: FFRHX launched on October 6, 2000, with a 20-year track record.
  • Investment minimum: The fund requires an initial investment of $2,500 for taxable brokerage accounts, and lower minimums may apply in retirement accounts.
  • Distributions: Income is paid monthly, with the yield fluctuating based on market rates and loan performance.
  • Assets under management: As of May 2025, FFRHX manages more than $10.5 billion in assets.
  • Fee structure: With an expense ratio of 0.68% and no sales load, FFRHX remains competitively priced for an actively managed high-yield fund.

What FFRHX Aims to Do

  • Investment objective: The primary goal of FFRHX is to generate a high level of current income. Capital appreciation is considered secondary.
  • How the fund works: The portfolio is mainly composed of senior floating-rate loans that are secured by the borrower’s assets. These loans are generally first in line for repayment in the event of bankruptcy, which helps reduce default risk.
  • Management strategy: The fund is actively managed by Jeff Moore and Michael Plage, who use fundamental credit research to select loans that offer strong income potential with acceptable levels of risk.

What’s in the Portfolio

FFRHX focuses almost entirely on corporate loans that pay interest at floating rates.

Main asset types:

  • Senior secured loans from U.S.-based and some international companies
  • Corporate high-yield bonds in smaller allocations
  • Short-term instruments and cash for liquidity
  • Limited exposure to collateralized loan obligations (CLOs)

Top sectors represented in the fund:

  • Healthcare
  • Financials
  • Technology
  • Energy
  • Services
  • Credit profile: The fund’s holdings are primarily rated BB or B by credit agencies—well below investment grade but carefully selected to manage risk and maximize yield.
  • Duration and reset frequency: The fund maintains a short effective duration due to frequent rate resets, which keeps its interest rate sensitivity low.

How the Fund Has Performed

FFRHX typically performs well when interest rates are rising, as it benefits from the resetting of loan rates. Its performance is more dependent on credit conditions than rate trends.

Returns as of May 31, 2025:

  • 1-Year Return: 8.42%
  • 3-Year Annualized Return: 6.18%
  • 5-Year Annualized Return: 4.73%
  • 10-Year Annualized Return: 3.88%
  • Since Inception: 4.60%

The fund generally delivers solid performance in stable or improving credit markets. During economic downturns, it may experience volatility as credit spreads widen and default risks increase.

Monthly Income and Taxes

  • Dividend frequency: Investors receive income monthly, making FFRHX attractive for those relying on regular cash flow.
  • Tax treatment: Distributions are taxed as ordinary income, not qualified dividends. This makes it more tax-efficient to hold FFRHX in IRAs or other tax-advantaged accounts.
  • Reinvestment option: Shareholders can choose to reinvest dividends into more shares or receive the cash, depending on account preferences.

Costs and Fees You Should Know

  • Expense ratio: At 0.68%, the fund offers a cost-effective way to access actively managed floating-rate credit.
  • No-load structure: There are no front-end or back-end sales charges. Fidelity also doesn’t charge transaction fees for FFRHX if you buy it directly through them.
  • Trading fees: While the fund doesn’t carry any marketing or 12b-1 fees, brokerages outside of Fidelity may impose small trading costs, depending on your platform.

Risks That Come With FFRHX

All investments carry some level of risk, and FFRHX is no different. Here are the key risks to understand:

  • Credit risk: The fund lends to below-investment-grade companies, which increases the risk of default.
  • Liquidity risk: Bank loans can become hard to sell quickly, especially during market stress.
  • Interest rate risk: Though floating rates offer protection, the fund still faces spread widening risks in volatile markets.
  • Economic risk: In a downturn, lower-rated companies may struggle more, potentially impacting fund performance.
  • Active management risk: The fund’s success depends heavily on the managers’ ability to pick the right loans and avoid troubled issuers.

Is FFRHX the Right Fit for You?

FFRHX may be a smart choice for:

  • Investors looking for consistent monthly income
  • Those expecting interest rates to stay elevated or continue rising
  • People who can tolerate moderate credit risk
  • Income-focused investors seeking diversification from traditional bond funds

It might not be ideal for conservative investors who value capital stability over returns. However, for those okay with high-yield credit and wanting to manage rate risk, it can be a useful part of a diversified income plan.

How to Add FFRHX to Your Portfolio

Investing in FFRHX is simple. You can purchase it through Fidelity or other major brokerages like Schwab, TD Ameritrade, or Vanguard.

To get started:

  • Log in to your brokerage account.
  • Search for the ticker: FFRHX
  • Read the prospectus and fund overview.
  • Enter your investment amount (minimum $2,500).
  • Choose your dividend option—cash payout or reinvestment.
  • Submit the order and wait for execution at the next NAV pricing.

Because it’s a mutual fund, trades are processed at the end-of-day price, not in real-time like stocks or ETFs.

Conclusion

FFRHX offers monthly income with lower interest rate risk by focusing on senior secured floating-rate loans. Managed by experts, it has no sales load and balances income with credit risk.

However, it’s important to consider that FFRHX comes with exposure to sub-investment-grade credit, making it more appropriate for those with moderate to high risk tolerance. Before investing, make sure it aligns with your overall financial strategy and income goals.

Key Takeaway: FFRHX delivers monthly income through senior floating-rate loans, offering rate flexibility and risk-adjusted returns for income-seeking investors who understand the credit risks involved.

FAQs

Can I include FFRHX in a Roth IRA or Traditional IRA?

Yes, FFRHX is available for both account types and may be more tax-efficient when held in a retirement account.

How often does FFRHX update its portfolio holdings?

The fund updates detailed holdings monthly, although summary allocations and sector exposure may be reviewed more frequently.

Is FFRHX available on platforms outside Fidelity?

Yes, you can find FFRHX on most major brokerage platforms, though transaction fees may vary.

What happens to FFRHX during a recession?

In a recession, the fund may experience increased volatility and defaults from borrowers. However, its senior secured structure provides a higher recovery rate than unsecured debt.

Does FFRHX use derivatives or leverage?

The fund may use derivatives to hedge risks but doesn’t use leverage to boost returns.