Global High Yield (GHY) has matured from being a US-centric, niche exposure to a globally diversified, highly rewarding asset class worth investing in. With over $2 trillion* in outstanding bonds, HY plays a key role in income portfolios across pension funds, insurers, and sovereign wealth funds.
We believe there are three key reasons why an allocation to HY should be a permanent, strategic component of an investor’s asset allocation model and even as a substitute to replace a part of their equity allocation.
1. Strong Income Generation and Attractive Reward to Risk
Income has historically been the largest contributor to HY returns — with the high coupon/yield income acting both as a cushion in downturns, and an additive return factor in recoveries. Investors have been well compensated for taking the relatively higher credit risk in HY bonds. Over the past 26 years,* GHY has never posted two consecutive years of negative returns — even during major crises.
Entry yield continues to be a reliable predictor of future returns, and today’s yield levels remain attractive even as credit spreads sit at median-historical ranges.
Read the full ‘Sponsored Commentary’ now at the link below
Supporting documents
Click link to download and view these filesWhy Allocate to Global High Yield in a Balanced Portfolio?
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