High-Yield Bonds May Be Losing Their Luster As Investors Grow Anxious About Swift Runup

Wednesday, November 28, 2012 07:47
edit
High-Yield Bonds May Be Losing Their Luster As Investors Grow Anxious About Swift Runup

Tags: emerging markets | investing for income | investment strategies

Net outflows in high yield bonds of $2.5 billion over the last two weeks may be signaling investor angst about the fiscal cliff.
 
They may also simply reflect investor portfolio repositioning toward the end of the year.

This Website Is For Financial Professionals Only


 
The outflows contrast against the record $69.5 billion inflows into the sector since the beginning of the year, making some analysts think the tide could be turning for high yield bond funds.
 
Investors typically move out of high yield bonds swiftly and intentionally. They may be uncomfortable with the speed and magnitude at which the asset class has attracted investor interest.
 
Some analysts disagree that the high-yield tide may be turning. There are few alternatives offering return in an historically low interest rate environment.
 
Others say local-currency emerging markets bonds may become the next high yield focus.
 
High yield bond funds have gained 12.3% so far in 2012 compared with a 4.2% gain for the Barclays US Aggregate Bond Index.
 
With such significant and rapid gains, investors may be searching for the next area of value in the fixed income arena.

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy