While the flood of quantitative easing allowed all credits to ‘float’ and perform relatively similarly, the effect of quantitative tightening – the tide going out – should see the opposite happen, and create significant pricing moves in individual credits. Good companies with high-quality cash flows and strong positions in their markets will prosper in this environment, while those that benefited disproportionately from the policy support will struggle.
For a nimble strategy such as ours, moves like these can be hugely profitable – providing the opportunity to add relative performance through avoiding ‘sinking ships’ while also providing opportunities to pick up discounted securities at highly attractive prices.
**For more information, visit the Artemis Funds (Lux) – Global High Yield Bond fund page.
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