High-yield bond funds are in for a tough ride

High-yield bond fund managers expect tougher times next year, but feel there is still potential for ...

High-yield bond fund managers expect tougher times next year, but feel there is still potential for this asset class in the short term. Spreads have once again narrowed following a sell off around April but otherwise most feel the short-term fundamentals for high yield remain sound. Newton's director of fixed interest Paul Brain says the high-yield market has been driven by surplus liquidity for the past couple of years. While this is set to continue in the short term, there are concerns about whether this can continue into 2006 amid a rising interest rate environment in the US, he a...