Bonds

To understand high yield bonds, lets define what a bond is. A bond is an interest-bearing investment that obliges the borrower to pay a specific amount of interest for a specific period and then at maturity to repay the investor the original amount of the loan. High yield bonds are bonds issued by corporations. 
 
These companies pay interest rates higher than those of top quality government or corporate bonds to attract investors. Corporate assets back the bonds; in case of default, the bondholders have a legal claim on those assets. High yield bonds can offer many advantages: 
 

1. As the name implies, high yield bonds frequently have higher yields. They can be called (redeemed) earlier, which is one reason investors receive higher interest payments. In general, these bonds have shorter maturities. Downturns in this investment are almost unseen due to their safety net.

2. High yield bonds have become a large global market and lack of liquidity is not a concern.

3. High yield bonds are correlated correctly with other investment categories.

4. High yield bonds earn higher returns to compensate investors throughout their diversified portfolio. High yield bonds tend to combine the higher returns associated with equities and the lower risk associated with bonds. 
 

5. These bonds will fluctuate based on more than just the direction of interest rates; they will also increase in value as the issuing company continues to improve its financial performance.

6. Long-term consistent and safe returns provide a secure financial environment for you portfolio.

For many, high yield bonds have generated superior returns compared to more conservative bond funds. Investors should invest a portion of their portfolio in this investment category to reduce their risk and increase their income and return potential. High yield bonds play an important role in a well-diversified portfolio for both the conservative and aggressive investor. Investors can capitalize on the opportunities of leveraged high yield bonds through our asset management programs. This allows for a safe and consistent profitable growth in your portfolio. Our systems provide the capability to implement this type of investment tool to your benefit for the long term. To further understand the benefits of this investment tool, feel free to ask one of our Asset Managers.

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