High yield: Time for a radical new approach?

High yield: Time for a radical new approach?

Christine Johnson, co-fund manager of the Old Mutual Monthly Income High Yield Bond fund, explains why investors may need a ‘radical' new approach to the sector.

There are a good many things the world needs now, but is more investment in the high yield bond market one of them? Over the past few years, the high yield market has had a great run. The Bank of America Merrill Lynch Global High Yield index returned 156.5% in sterling from the trough of the market in mid-October 2008 to mid-October 2014. An even more impressive result when you see the FTSE All-Share (ex ITs) returned 93.8% over the same period, and gilts returned 47.8%. It is probably safe to say we are not going to get a repeat of those kinds of returns over the next five to six yea...