Research finds high-yield debt outperforms other fixed-income products since 1970
Updated
Updated · The Wall Street Journal · Apr 29
Research finds high-yield debt outperforms other fixed-income products since 1970
6 articles · Updated · The Wall Street Journal · Apr 29
The study, led by Sina Davani, Addys Lima Orozco, and Brianna Morgan Hall, shows high-yield debt funds averaged 7.41% annualized returns versus 6.13% for generic fixed-income funds, with higher volatility.
High-yield debt excels during economic expansions and falling interest rates but suffers negative returns and increased volatility during recessions or rising rates, making timing crucial for investors.
Despite higher long-term returns, high-yield debt carries significant credit risk and default risk, requiring investors to carefully consider economic cycles and risk tolerance when adding such assets to portfolios.
Are today's attractive high-yield returns simply too good to be true?
Has the high-yield market fundamentally changed, making past performance irrelevant?
With U.S. debt soaring, are high-yield bonds a ticking time bomb?
Could AI infrastructure become the safest bet in the 'junk bond' market?
As Treasuries lose their traditional appeal, what is the new safe-haven asset?
Is the investor 'flight to safety' during recessions a predictable mistake?