High yield bond funds suffering from 'misperception'

High yield bond funds suffering from 'misperception'

High yield bond funds are suffering from a "misperception" amid the current market turmoil, according to the guests on the latest FTAdviser podcast.

Ian Brady, chief investment officer at WH Ireland and Sam Dovey, head of fund research at Ravenscroft join investment reporter Sally Hickey to speak about funds they’re investing in, where to find real returns and how they’ve found hybrid working.

Brady highlighted his positive attitude towards US treasuries, recommending iShares’ 10-Year Treasury ETF, as well as two China funds (Matthew’s China Smaller Companies and iShares China Large Cap ETF).

He added: “One area of the market we think is suffering from misperception is certain parts of the high yield market.

“As everyone knows we’ve seen a blow out of spreads to about 190bps and the part we especially like is the short duration part of high yield.

"The beauty of short duration funds is that by their very nature they are self-liquidating. [...] Even if rates go higher, it means they have the possibility to reinvest at higher interest rates."

He also cited the certainty that some short duration high yield bond funds can offer.

Both participants own the Royal London Short Duration High Yield fund and the Schroders Strategic Credit fund.

Dovey added that there are always returns to be found.

She said: “Two sides make a market, as long as you have a robust repeatable investment process and the investment thesis on the companies you’re buying is still intact…why would you not buy it?”