FYI: The BofA Merrill Lynch US High Yield Index just had a very, very good month. From its Feb. 11 low, when it stood at 867 basis points, option-adjusted spread (OAS) tightened to 682 basis points a month later, on March 11, writes Marty Fridson, Chief Investment Officer of Lehmann Livian Fridson Advisors LLC for S&P Capital IQ. That left the index with a total return of 8.08%.
That may not sound very impressive, until you look at the mean return for all full calendar years since the index’s inception, which is 9.09%. As Fridson writes, the 8.08% return annualizes to an “astounding” 165.75%.
One explanation could be “hyper-emotionalism,” as the S&P 500 Index returned 10.82% (264.48% annualized) over the same interval,
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2016/03/16/why-high-yield-mutual-funds-may-lag-the-index-sp/tab/print/
