Climate is right for high-yield bonds

Fund manager's comment

And so it is confirmed. The first interest rate rise since February 2000. Wiser bond investors had a...

And so it is confirmed. The first interest rate rise since February 2000. Wiser bond investors had already heeded the warnings and moved into bonds that were less sensitive to interest rate risk during the summer. High yield has performed strongly, while floating rate notes (FRNs) have benefited from three-month Libor increasing from 3.4% in July to 4% now. Shorter-dated bonds have, in general, outperformed, although the flattening of the yield curve has rescued ultra-longs. In one sense, the base rate rise signals the economy is recovering and is strong enough to cope with a little mon...