Ask The Experts: Long-Term Positives Trump Near-Term Volatility For US High Yield
Jim Cielinski, Head of Fixed Income at Threadneedle Investments shares his outlook for the US high yield market.
What is the outlook for the US high yield market over the next two to three years?
- High yield as an asset class will face some near-term volatility due to factors such as the fiscal cliff, the Eurozone crisis and global growth slowdown
- Over a two to three year period, outlook is positive due to low default losses and healthy corporate balance sheets
What will be the performance drivers?
- High yield is able to excel in slow growth environment
- Hence so long as a severe recession does not occur, high yield will be able to do well
- Income will also provide good cushion for investors
Are there any risks investors should be aware of?
- Similar to many asset classes, liquidity in times of stress can be an issue
- However, high yield should not be perceived as a low quality asset class
- Investors should be aware of the increased volatility in the near-term
- Advices investors to ride through the volatility for the longer term prospects
||: Ask The Experts: Long-Term Positives Trump Near-Term Volatility For US High Yield