The Outlook For High Yield Bonds In 2015 – Get High Yield Corporate Bond Fund Definition

Wed, Jun 26, 2013

The Outlook For High Yield Bonds In The Rest Of 2015

Since the Fed pushed rates to zero and forced investors to buy bonds with higher risk profiles to eke out a 5% or 6% yield, high yield debt has Outlook For High Yield Bonds In 2015been one of the greatest benefactors of the policy.

For four years this policy kept yields falling and bond prices rising. It was a clear bubble. And it was clear to any experienced investor that it wouldn’t last.

But it didn’t matter for years. There was always a great fool to keep prices up.

This situation has happened many times in the financial markets. However, it always ends the same way – badly.

That ending is in progress right now.

The iBoxx High Yield Corporate Bond Fund (NYSE:HYG) has fallen to six lows:


And the JP Morgan Emerging Markets Bond Fund (NYSE:EMB) has fallen even harder:

These drops are a serious concern for any investor.

We talk about how financial assets build up a trust with potential investors. High yield debt in the United States and from emerging markets has built up a lot of trust with investors since bottoming out in 2008.

That trust is gone. And it’s going to take a long time to get it back.

That’s why we here at Contrarian Insights continue to have a negative outlook for high yield debt in 2015.

There are great times to buy high-yield bonds and bad times. A few months ago was the worst time to buy high yield debt.

Today is a better time, but still not a good time to be an investor in high yield debt.

A few months from now will probably be an even better opportunity to buy into high yield bonds.

The Fed will likely keep interest rates low for years to come. That will likely put a floor in high-yield bonds. But successful Contrarian Investors don’t buy any dips, they buy bottoms.

Right now there’s a lot more Risk In High Yield Bonds than there is potential rewards.

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Outlook For High Yield Bonds In 2015

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