High Yield shines: 5 factors to watch

Since the Covid-19-caused market turmoil in early 2020, high yield has stood out as one of the top-performing segments within fixed income—delivering returns well ahead of the Bloomberg US Aggregate Index, US corporate bonds, emerging markets bonds and securitised credit.

“Looking to history again, we believe the high-yield market has the potential to remain strong and could serve many investors well as a permanent portfolio allocation,” says Shannon Ward, fixed income portfolio manager at Capital Group. 

In a recent insight, the investment company highlights five factors for long-term investors to consider:

1) High yield market timing can be a dangerous game

2) History provides indications of what has driven returns

3) S&P 500 Index constituent earnings growth: a complementary indicator

4) Credit quality: not last decade’s junk

5) An opportunity to rebalance

Read the full insight here.