Credit markets have staged an epic rebound from the depths of March 2020. But in a low-growth, low-yield world, we believe there may be more room to run in 2021.
The S&P 500 Index hit an all-time high on April 23, thanks to improving investor optimism. But for some equity investors, market highs signal a good time to reduce downside risk. Shifting a modest allocation into US high yield is an efficient way of doing just that—significantly lowering overall risk while only modestly curbing potential returns.
First, the bad news: high-income investors should saddle up for another bumpy ride in 2019. Now the good: with challenges come opportunities—and we see plenty on the horizon for investors who take the long view.
A dramatic fall in oil prices, followed by a sell-off in high-yield energy bonds—is it time to worry about oil and gas companies again? Quite the contrary. The North American issuers that make up most of the world’s high-yield energy market are in a better position today than they have been in years.
How do you blow a No. 2 draft pick? For the New York Giants, it was a combination of bad math and overconfidence. But at least Big Blue can take comfort in having plenty of company: investors, particularly high-yield bond investors, are prone to similar mistakes.