Why capital security is now a priority

High-yield bonds may seem riskier than they once did, but as long as intermediaries divide exposure between high-yield and investment grade markets, investors may still find them an attractive proposition

In previous cycles, high-yield bond funds have seemed the perfect solution for income seekers looking to beat low savings rates, with yields of more than 10% on offer. However, the capital risks that high-yield debt has recently demonstrated may make some investors think twice ' and puts the onus on independent financial advisers to be particularly circumspect on their bond fund recommendations. High-yield refers to a bond with a sub-investment grade rating, which means a rating of BB+ and below from Standard & Poor's or Ba1 and below from Moody's. To compensate for a lower credit rating, t...