Despatches  

Advisers turn to high yield bonds for income

Advisers turn to high yield bonds for income

Advisers see high yield bonds as part of the solution for income investors in the current climate, according to the latest FTAdviser Despatches poll.

The poll found that over 90 per cent of respondents see a role for high yield bonds.

It is an asset class that has marginally underperformed against strategic bond funds this year to date, but which may look more attractive as a result of higher inflation.

There is a growing need for portfolios to generate higher levels of income to help clients in decumulation mitigate the higher cost of living. 

High yield bonds are those with a credit rating of below BBB, while those above that rating are known as investment grade bonds. The highest credit rating a high yield bond can achieve is BB. 

Respondents to our poll, which was conducted via ftadviser.com, were overwhelmingly in favour of deploying some capital to the asset class, despite its sensitivity to the performance of the wider economy, and correlation with equities. 

The poll found that 96 per cent of respondents favoured high yield bond funds right now, with only 4 per cent not seeing a role for such products in the present climate.

david.thorpe@ft.com