High yield returns to its namesake

June 15, 2022

We can confidently say that standalone valuations now justify the asset class’s name – it’s back to offering high yields. How should investors position to benefit from the repricing?

As yields across the global high yield market continue to climb, we believe investors need to re-orient how they look at the asset class, as valuations have dramatically improved over a short-term horizon.

While asset quality has been steadily improving over the past decade with a greater tilt to BB credits in the US and European markets, prior lower yield levels were challenging to justify for allocators looking for an income boost from their sub-investment grade allocations.

Putting today’s attractive valuations to one side, most investors won’t be topping up their high yield allocations without considering the outlook for fundamental and technical factors.

“We are now in a structurally different yield regime, as developed market central banks pursue quantitative tightening policies.”

Download our latest insight to read our outlook for the asset class through the second half of 2022 and how to balance risk and reward in portfolio positioning.

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