It may be time to revisit high yield. While investors have gravitated toward bank loans and private credit for years, an environment of low default rates, a higher-quality universe and a projected soft landing if a recession occurs make high yield an attractive asset class, managers say.
Tim Leary, senior portfolio manager on the BlueBay fixed-income team at RBC Global Asset Management (U.S.), said in an interview that current conditions have brought yields up, and that high yield as an overall asset class is healthier than it has been in years despite the ongoing threat of a coming recession.
He argues that while the flood of capital into private debt has worked well for investors, it might prove to be a far riskier bet than high yield, which used to represent peak risk in fixed income.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.
