Perspective - Video Webcast
60 seconds on global credits: high yield vs investment grade
In this short video Manu George, Senior Investment Director, Fixed Income, shares his view on high yield vs investment grade.
Schroders looks to invest in the best possible market for investors, which means we look for the most attractive opportunities whether it is yield, but also bearing in mind that we want to minimize volatility and give a stable and more deterministic income for our clients.
For the perspective of high yield, we are less excited about the high yield market, driven by a couple of factors. One being the more obvious factor, slowing global economy will put pressure on the business profile of high yield, which tend to be much more levered or debt-driven companies. And in the environment where the economy is slowing, those companies with too much debt will struggle to pay off the interest that they owe and the loans they have taken out.
So for us, we want to be allocating our risk more towards the investment grade space within advanced economies than the high yield space at this point in time. Once valuations retrace to a level that we feel compensates us for the risk that the high yield market represents, then we will look to reengage again in the high yield market.
Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may change. Information herein is believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall. For risks associated with investment in securities in emerging and less developed markets, please refer to the relevant offering document.
The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments.
Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
This material, including the website, has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.