Peritus’ BlogSee our daily market commentaries and insights. Position PapersThe New Case for High Yield – January 2012 Throughout its 30 year history, the high yield market has often been viewed as a confusing or an alternative asset class. However, the reality is that this is a large, developed and liquidity asset class. We have provided this “owner’s manual” for those investing in the high yield market. In it we detail the history and development of the asset class, discuss the legislation and ratings methodologies that have created opportunities in the marketplace, and compare historical risk adjusted returns with other asset classes. Additionally, we describe our own investment philosophy and approach to the high yield market. We believe that the benefits from investing in the high yield market are undeniable. Other Writings and PublicationsHigh Yield Bonds versus Equities: A Practical View – January 2012 We believe it is time that investors and investment advisors wake up to the new realities of the world. The notion of equities magically compounding money at double digit rates should have been put to death over the past decade where the S&P 500 has effectively returned nothing. Amazingly hope springs eternal, as both pension accounting and many investment boards and consultants continue to spew the dribble that the next decade will be terrific for equity investors. We see limited growth for equities for the foreseeable future, and most other fixed income alternatives are currently offering very little in the way of yield. Yet the high yield bond market has not only proven to outperform equities (see document for data), but offers a much better yield than both equities and various other fixed income asset classes. We anticipate that investors have a limited window to allocate significant resources to the high yield market and lock in what we see as very attractive yields. We believe that this window will ultimately close as more people recognize the opportunity, which will reduce the yields available. |
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