Schroders' Sparks: How should investors deal with a high yield correction?

High yield bonds outperformed virtually all other fixed income asset classes in both 2012 and 2013, and are off to another strong showing so far in 2014.

However, the average yield available in the overall global high yield market is now close to all-time lows. Some commentators are now flagging high yield bonds to experience losses this year. We agree that the overall high yield market is fully valued right now, but that any upcoming market downdraft will not lead to a prolonged bear market, but rather, should be seen as a buying opportunity. It is crucial for investors to distinguish between an environment that would lead to a bear market, and a mere short-term correction that resets valuations to attractive levels. After just a mino...