Finding value in the neglected zone

Stéphane Monier, head of fixed income and currencies at Lombard Odier Investment Managers, reveals the best way to capture value in the corporate bond universe.

For an asset class that is so vigorously researched it may be a surprise to hear that in the middle of the credit rankings is an area of corporate bonds relatively overlooked. This is the crossover zone between investment-grade (BBB) and high-yield (BB and below). This should be music to the ears of credit investors, who, like investors in other fixed income asset classes, face a dilemma: how to generate a positive return when bond prices are falling and yields are rising, without compromising the quality and credit risk of their portfolios? Investors need yield but they also seek better...