Poor quality of new high yield bonds leads to market worries

ON BONDS

Henderson's Jenna Barnard describes the current trends in the bond markets.

Getting the call right between a mid-cycle correction and an end-of-cycle turn is critical for bond managers, particularly in the credit market where this judgement has to be made far enough in advance to source the liquidity needed to make asset allocation shifts. Since the spring of 2009, the primary driver of returns in many strategic bond funds, including our own, has been their allocation to the most credit sensitive areas of the market – high yield bonds and subordinated financial bonds where substantial capital gains have been recorded. However, the recent slowdown in the pace ...