Investing in High Yield Bonds
High yield investing has the potential to offer risk-aware investors an attractive source of income.
Our expertise
The teams are positioned globally across US, Europe and Asia, providing resources to meet the needs of a large, global client base.
The investment teams employ a consistent investment process which has been tested over a range of market cycles and conditions. This process is centred on the philosophy that the key to superior long-term returns in the fixed income market is compounding current income and avoiding principal loss through fundamental credit analysis and macroeconomic research.
Our strategies
Our strategies all follow a robust bottom-up credit research process that focuses on identifying companies with improving credit trends, while the top-down component seeks to identify risks and opportunities associated with the overall economy and market.
In this way we aim to minimise default risk and manage volatility through active management, while pursuing high yielding opportunities and potentially generating capital growth
Why invest in high yield bonds?
High yield bonds offer a number of potential benefits, alongside some specific risks such as higher volatility and higher default rates. For those in a position to take on higher levels of credit risk, high yield bonds may provide a significant yield enhancement to a well-diversified portfolio.
In addition to higher income than investment grade bonds, high yield often behaves differently to other areas of the fixed income universe so may provide important diversification to a broader fixed income portfolio.
Like equities, high yield bond prices can increase as a result of improved performance of the issuing company or a wider economic upturn. However, the typically higher income component of high yield bonds means that they are generally less volatile than equities.
High yield bonds are typically issued with shorter maturities than many investment grade bonds (generally less than 10 years) and, therefore, tend to have relatively lower duration. This means a high yield strategy may be less exposed to interest rate risk than most investment grade strategies.
Risks
No assurance can be given that our investment strategies will be successful. Investors can lose some or all of their capital invested. Our high yield strategies are subject to risks including, but not limited to: liquidity risk, credit risk, counterparty risk and the impact of any techniques such as derivatives. The use of such strategies may also involve leverage, which may increase the effect of market movements and may result in significant risk of losses.
Disclaimer
This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.
Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.
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