High Yield Spotlight

The corporate bond market has finally begun to shift. Junk bonds are now badly underperforming the broader bond market and spreads have started to widen considerably. No longer is reaching for yield the easy thing to do. The BNY Mellon High Yield Strategies Fund (DHF) may be more advantageously positioned for this market.

Corporate bonds have looked vulnerable for a while now with credit conditions deteriorating and spreads remaining abnormally low. It looks like they may finally be paying the price. Income investors still looking to maximize yield might want to consider dialing back credit risk here. The BlackRock Core Bond Trust (BHK) and its focus primarily on investment-grade credit could be particularly advantageous.

The fixed income market is certainly getting a little more complicated. The days of being able to capture a high yield from junk bonds with almost no credit risk priced in appear to be ending. One area that’s held up is emerging markets debt. One fund that’s smaller and a bit under the radar is the Morgan Stanley Emerging Markets Domestic Debt Fund (EDD).