About high-yield bonds

These are the conclusions of a study by the "Bond Vigilantes". The complete paper can be found by clicking here

•Low interest rates and ageing demographics are enticing investors to high income generating assets.
•High yield fixed interest assets are set to benefit from these structural shifts in investor behaviour.
•The low duration, high income nature of the asset class is attractive in a world of ultra-low interest rates.
•There are genuine opportunities in today’s high yield market due to the wide dispersion of credit spreads. Fundamental credit research is vital.
•There is a structural shift to high yield occurring in fixed income markets right now.

My personal experience is that investors should buy mutual funds investing in high-yield bonds. The problem is that there are many of them. The challenge is to find conservative mutual funds investing in conservative high-yield bonds.

The graphs of their price should be fairly stable and less volatile than that of the stock market. I know, it takes some work.

My experience is that JNK is too volatile. Some mutual funds are less volatile.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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