Are junk bonds a screaming buy?

A SCREAMING BUY?

Ian Spreadbury, portfolio manager of the Fidelity Strategic Bond fund, discusses the outlook for high yield bonds.

Many strategic bond managers have favoured heavily overweighting high-yield bonds within their funds – which up until the recent market sell-off had served them well. The stunning return from high-yield debt since the depths of the credit crunch has perhaps masked the risks that remain an inherent part of investing in so-called ‘junk bonds’. The asset class remains acutely sensitive to the weakening economic environment. Looking ahead, what can we expect from high-yield bonds and does the recent sell-off actually present a buying opportunity? The starting point for an assessment of hi...