In an environment of raising interest rates, investing in short dated bonds is attractive. High yield is specifically of interest, with historical good performance in times of rising rates. Looking at short dated high yield, you find that it outperforms the full high yield universe the longer the period of rate increases. In addition, there has only been one loss making year out of the last 15 and in this period an investor received 90% of the return at 75% of the volatility of the full high yield universe.
High Yield outperforms in Periods of Increasing 10 Yr US Yield
Having been in the short dated space for years, Sparinvest is launching its global, developed and emerging market, “Value Bonds – Short Dated High Yield” fund on June 16th, an actively managed and open-ended fund focusing on bottom-up credit analysis.
Read more about the new fund here.