UK investment grade sector is gaining favour over high yield

The UK investment grade sector has struggled under the burden of low yields and tight spreads but ha...

The UK investment grade sector has struggled under the burden of low yields and tight spreads but has outperformed the high yield sector over the past few weeks. Over the past year, demand for high yield bonds has been strong, says Sukrita Sethi, assistant manager on Fidelity's Sterling Bond and Extra Income funds. "Demand has shifted to high yield debt as investors have struggled to meet their targets and have focused on what offers the highest returns," she says. Sethi points to returns in the high yield sector of around 3% for the first quarter of 2006, while investment grade bonds sa...