Time to Downshift Your High-Yield Portfolio?
High yield has generated exceptional returns as it has recovered from the 2007–2008 market dislocations. We’ve recently seen a meaningful retracement of spreads and an increase in volatility. Predicting future returns is difficult, but our view is that high yield remains a very attractive investment for the long run. However, to stay in the game, it may make sense to downshift the risk profile of your high-yield strategy.