Should i buy high yield bonds now

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Gennadiy Goldberg, U. At the same time, investment-grade issuance has tumbled We own some. That risk-reward is so skewed right now, but you need to be realistic. Graff said investors can minimize risk by looking to single- or double-B companies rather than the riskier C-rated funds. Analysts are predicting that there will be an increase in the credit quality of some beaten-down companies, known as fallen angels, which reached a record in Meanwhile, the market has already reacted with a bond selloff that has pushed long-term yields higher.

The yield on year U. Why would junk bonds and non-investment-grade commercial loans be the best fixed-income space in a rising-rate environment?

There are three reasons:. So a high-yield bond fund enjoys the advantages of an improving economy, because it means defaults are less likely.

It enjoys pricing advantages, especially if its duration is very low, because the portfolio will turn over more quickly with freed-up money being invested in new bonds paying more. These numbers tell you why. The big money pot for highways, bridges and other projects means these companies are expected to grow earnings at double-digit rates. Follow him on Twitter PhilipvanDoorn.

Home Investing Bonds Deep Dive. Deep Dive This high-yield strategy may be best for income as inflation becomes a threat Last Updated: May 22, at a. ET First Published: May 21, at a.