By Russ Koesterich, CFA iShares Global Chief Investment Strategist As a number of market watchers have pointed out recently, high yield doesn’t look so junky anymore. High yield spreads are historically tight, at levels not seen since the fall of 2007 as the chart below shows, meaning there’s currently a much smaller difference in yield between a high yield bond and a comparable Treasury. At the same time, some high yield prices have reached all-time highs. In other words, investors aren’t being rewarded that much for holding high yield, traditionally viewed as a risky asset class. The chart above shows the Barclays US Corporate High Yield Average OAS through 3/13/2013. OAS stands for Option-Adjusted Spread, or the amount by which a bond’s yield exceeds the yield of a similar duration Treasury when accounting for any optionality embedded in the bond [check out the Better Than AGG Total Bond Market ETFdb Portfolio]. [...] Click here to read the original article on ETFdb.com. Related Posts: Active ETF Investing: 3 Things To Consider The Great Duration Rotation Continues, But For How Long? High Yield Bond ETFs Battle For Inflows: HYG vs. JNK 2 Factors Keeping a Lid on Interest Rates The New Fixed Income World
By Russ Koesterich, CFA iShares Global Chief Investment Strategist As a number of market watchers have pointed out recently, high yield doesn’t look so junky anymore. High yield spreads are historically tight, at levels not seen since the fall of 2007 as the chart below shows, meaning there’s currently a much smaller difference in yield between a high yield bond and a comparable Treasury. At the same time, some high yield prices have reached all-time highs. In other words, investors aren’t being rewarded that much for holding high yield, traditionally viewed as a risky asset class. The chart above shows the Barclays US Corporate High Yield Average OAS through 3/13/2013. OAS stands for Option-Adjusted Spread, or the amount by which a bond’s yield exceeds the yield of a similar duration Treasury when accounting for any optionality embedded in the bond [check out the Better Than AGG Total Bond Market ETFdb Portfolio]. [...]
Click here to read the original article on ETFdb.com.
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