Room for further upside from high yield offerings

High yield bonds are fast becoming the asset of choice for investors seeking fixed interest exposur...

High yield bonds are fast becoming the asset of choice for investors seeking fixed interest exposure as investment grade bonds and gilts lose their attraction. Although firmly at the riskier end of the bond market, the sector certainly had a good run in 2003. While the FTSE All-Share index posted a total return in excess of 20% during 2003, the Merrill Lynch European High Yield Constrained index delivered almost 35% for sterling investors, says James Foster, head of credit at Isis Asset Management. Over 2003, the average UK gilt fund returned just 0.9% on a bid-to-bid basis against 5% ...