Short-dated high-yield bonds may lag equities during the good times but history suggests they make up for that when times get tough.

 

In our previous High Yield Happenings, we looked at two different ways to answer to a question we are often asked by clients: where does short-dated high yield sit in a portfolio context? First, we looked at using it as part of a balanced portfolio of equities and bonds. We then looked at using it to supplement the returns from a strategic allocation to cash. 

 

For the final instalment, I thought it was worth talking about the role high yield can play in managing risk – how it can allow investors to take some of their chips off the table, while still retaining the potential to generate meaningful returns.