High yield ETFs and passives may struggle in new phase of the credit cycle

End of 146 month cycle

clock • 3 min read
Mike Scott is a credit manager at Man GLG

Mike Scott is a credit manager at Man GLG

The pre-pandemic economic cycle in the US was the longest since records began. Lasting 146 months from December 2007 until February 2020 , it seemed like the bull market would never end – until it was brought to a shuddering halt by the onset of Covid-19.

Although the pandemic certainly ended one economic cycle and began another, the Covid-inspired downturn was relatively brief. In the wake of the economic downturn, massive monetary stimulus and fiscal bailouts muted the credit cycle and limited the number of defaults. Within two months, the US economy was expanding and the cycle began again. Even though this current cycle is barely two years old, we nevertheless see storm clouds on the horizon. Inflation continues to run hot. To fight it, the Federal Reserve is committing to hiking interest rates, which is usually enough to end most econ...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now


Already an Investment Week


More on Global

iMGP Global Concentrated Equity fund

iM Global Partner launches global equity fund with Scharf

Same approach as Global Opportunity fund

clock 23 June 2022 • 1 min read
Fixed income is vital in fulfilling key functions, such as "diversification from equities, capital preservation and income".

Deep Dive: Pockets of hope for fixed income

'Easy to write off'

Elliot Gulliver-Needham
clock 17 June 2022 • 4 min read
Oliver Bilal, head of EMEA distribution at Invesco

Invesco launches net zero corporate bond fund

Article 9 fund

Elliot Gulliver-Needham
clock 15 June 2022 • 2 min read