Fundamentals support high-yield bonds

Fund manager's comment

Sentiment towards the bond market has picked up over the past few months, as indications of an econo...

Sentiment towards the bond market has picked up over the past few months, as indications of an economic recovery recede and investors reduce expectations of interest rate rises in the US and UK. We are cautious regarding bond prospects and maintain our underweight position in the asset class as a whole. But while government and investment-grade valuations look stretched, we continue to see value in the high-yield market. Recent movements on the bond market appear to follow the cycle script. Yields are still at extremely low levels, which is a crucial fact to keep in sight. As such, fro...