FYI: Based on key systemic and persistent traits, high yield corporate bonds should be viewed as a strategic asset class within the portfolio construction process—even if the flow patterns within high yield ETFs indicate a more tactical investor mindset. Those tactical shifts, after all, are commonly expressed from a strategic base with investors then dialing up or down the level of credit risk within a portfolio based on the market risk regime (euphoria to normal to crisis), where we are in the corporate profit/default cycle, and where valuations (cheap or rich to historical averages) currently stand.
The strategic case for high yield is grounded in three areas:
.A persistent source of income;
.Higher risk-adjusted returns than traditional core bond exposures; and
.Low correlations to traditional bond segments, improving diversification opportunities.
Regards,
Ted
https://global.spdrs.com/blog/post/2019/May/spotlight-on-high-yield-the-strategic-case-for-a-long-term-allocation.html
