Investors still bullish on high yield as fund inflows continue
The high yield sector has been one of the top performers in the international bond markets for the past two years. With sub-investment grade default rates continuing to fall, the prospects look good for a third straight year of strong returns. But will the reality be so straightforward?
The standout asset classes in the credit markets last year in terms of return were undoubtedly high yield and the emerging markets. And while there are signs that the rally in EM bonds may be slowing, allocations towards high yield continue to surge. According to funds data provider EPFR Global, net inflows into high yield bond funds exceeded $1 billion for five of the first six weeks of 2011, with year-to-date inflows more than double that of the next highest sector, global bond funds. EM bond
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