Jim Cielinski, Head of Fixed Income at Threadneedle Investments shares his outlook for the US high yield market.

Questions:
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