Enhancing credit income without taking undue risk | Insight Investment

Let's suppose the following scenario. An investor sees the average income from global investment grade credit portfolio is at 4.3%¹. They appreciate the high credit rating on offer, but they are willing to take more risk for more income. Next, they look at the average 6.6%1 income from global high yield bonds but deem the asset class too volatile. Can the investor be offered a happy medium?

Broadly, this is the task of a multi-sector credit fund. It can invest in a mix of investment grade credit and high yield debt and so we think this makes it well placed to target income and risk levels that sit between the two asset classes.

Figure: Targeting high yield levels of return with investment grade volatility (yield to worst shown)²