'Quality' high yield bonds still able to outperform as rate rises loom

A key challenge on the horizon that investors are facing in 2017 is the prospect of continual rises in interest rates.

In March 2017, the Federal Reserve raised interest rates by 25bps to 0.75%, and indicated two further increases in the coming 12 months.  While rising interest rates in the US places pressure on fixed income products, the fillip is that with strong economic growth there is room for high yield products for investors seeking income.  This is particularly the case at the 'higher quality' end of the spectrum where the risk of default is lower, and is reflected in the make-up of the BofAML US HY Master II Constrained TR USD index (representative of the Lyxor BofAML $ High Yield Bond UCITS ...