High-yield bonds set for steady recovery

While there are signs the next 12 months will be better for high-yield investors following a turbulent 18 months, it will remain crucial to mitigate against downside risk

The past 18-months has been a volatile period for equity and bond investors. The economic slowdown has seen significant falls in equity and high-yield bond markets as investors have sought a safe haven, typically in government bonds or highly rated corporate bonds. Unless there is a major equity market rally between now and the end of the year, 2002 will be the third consecutive year of positive returns from gilts and negative returns from UK equities. So far this year, the FTSE British Government All Stocks Index has returned 5.5% compared to -17.1% from the FTSE All-Share In...