How could fallen angels bonds represent a sweet spot for fixed income investors?
• Their downgrade to high yield causes price dislocations that open strong risk-adjusted return opportunities
• The supply outlook is favourable
Our active management approach capitalises on a bond's fall from investment grade to lock in these price dislocations; only an active approach can distinguish fallen angels from the falling knives that risk further credit deterioration.
In fact, the data on fallen angels are so compelling that we believe high-yield investors should consider a strategic allocation to the segment.
This post is funded by Lombard Odier Investment Managers
