Is EU high yield still worth a look?

ON HIGH YIELD

clock

Returns from European high yield are low, leading many investors to look elsewhere. But technical support is still in place and the outlook is sanguine, says Alliance Trust investment's Kenny Watson.

With all-in yields close to their lows and spreads approaching pre-crisis levels, investors and commentators are questioning the level of future returns from European high yield. Valuations in terms of all-in yields are low and any upward pressure on German bond yields may result in returns being restricted. Also, a high percentage of the market is call-constrained which limits material capital appreciation from current levels, as it is advantageous for the issuer of the bonds to call these and take advantage of the low refinancing costs in the market. Other factors worth watching ...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Bonds

Partner Insight: Moving from cash to corporate bonds ahead of cutting-cycles

Partner Insight: Moving from cash to corporate bonds ahead of cutting-cycles

Following the meteoric rise in rates from 2022, investors have piled into cash and money market funds. However, with rates expected to fall soon investors may want to consider putting some of that cash exposure elsewhere. Fidelity Fixed Income Investment...

Ben Deane, Investment Director, Fixed Income - Fidelity International
clock 19 March 2024 • 13 min read
JP Morgan AM to wind up Sterling Bond fund as assets dwindle

JP Morgan AM to wind up Sterling Bond fund as assets dwindle

Fund size of £29m

clock 18 March 2024 • 1 min read
JP Morgan AM's Iain Stealey: Debt maturity wall is not to be feared

JP Morgan AM's Iain Stealey: Debt maturity wall is not to be feared

Surge in corporate bond issuance

Valeria Martinez
clock 15 March 2024 • 2 min read
Trustpilot