The trouble with high yield credit - why investors should be wary... Vimal Gor, Head of Income & Fixed Interest, BT Investment Management As central banks globally turn towards quantitative easing programs, it's a hard market for income with interest rates at record lows. Focus in the income world is shifting to high yield credit, but investors should be wary - cheap returns may be too good to last. High yield credit is returning 4.9% - over three times the return of the 5-year US Treasury bond at 1.6%. Spreads of 3.3% are tighter than even the most heady credit environment ever, which was less than the 4% in 2006. Worrying? Maybe. While you could say this is cheap - for high yield credit to remain attractive, remember interest rates have to stay at zero for at least your investment horizon. Read more commentary here (VIEW LINK)
Please sign in to comment on this wire.