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Cameron Passmore CIM, FMA, FCSI

Portfolio Manager

Benjamin Felix MBA, CFA, CFP

Associate Portfolio Manager
Contact
  • T613.237.5544 x 313
  • 1.800.230.5544
  • F613.237.5949
  • 265 Carling Avenue,
    8th Floor,
  • Ottawa, Ontario K1S 2E1

Do You Need Alternative Investments? Part I: High Yield Bonds

December 1, 2017 - 2 comments

Do you need more yield? High yield bonds might be the answer. But not actually. Bonds are typically held in your portfolio for stability, but high yield bonds are risky enough that they should not be relied on for that purpose.

 

Investing in high yield bonds may be done for other reasons, such as diversification. Unfortunately they have not historically done a very good job at increasing the risk-adjusted returns of investment portfolios. Are high yield bonds a good investment? Only time will tell. In today’s Common Sense Investing video, I review the long-term evidence on high yield bonds, and offer my opinion on their use in portfolios.

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By: Ben Felix with 2 comments.
Comments
  18/12/2017 1:58:51 PM
Benjamin Felix
Thanks Jim. It seems unlikely that a period of rising interest rates will materially affect the long-term risk/return contribution of high yield bonds in an investment portfolio. I suppose if rates are rising there might be less call risk on high yield bonds, but that could be offset by falling prices.
 
  11/12/2017 4:54:28 AM
Jim McDowell
Nice presentation. But now that interest rates are increasing after decades of decrease, are your cited studies outdated?
 



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