High-Yield Bonds: Analyzing the Risk and Return Tradeoff When Rates are Negative

Qontigo
By March 20, 2020 15:53

High-Yield Bonds: Analyzing the Risk and Return Tradeoff When Rates are Negative

Qontigo Applied Research White Paper

In a world where some investors pay the government for the privilege of lending it money—and where even fixed income securities with the lowest investment-grade credit ratings yield barely more than 1% per annum—the “hunt for yield” becomes ever more challenging. One way for fixed income fund managers to augment their expected return is to buy securities with lower credit quality. Besides providing bigger coupon payments, high-yield bonds also come with the added benefit of being more negatively correlated with sovereign bonds than their more highly rated peers. The latter not only …

Qontigo
By March 20, 2020 15:53

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