High yield bonds: US or Europe for the best returns?

It's not that simple

Investors often ask global managers like us whether we prefer European or US high yield bonds.

If only the answer were as simple as the question. Let's start at the top - the yield difference between the two markets. Over the past ten years, as the blue line in figure one shows, US high yield has consistently delivered more than European high yield - typically between 2% and 3%, but on occasion much more. Investors embrace risk as volatility and recession hamper search for yield You might assume that income-focused investors should therefore concentrate on US assets. But it is more complicated than that. What about currency movements - often driven by interest rate different...