Sector report: High yield bonds

As investors continue to search for yield in this low interest rate environment, high yield bond funds are certainly alluring, although investors need to be cognisant of the risks. The third quarter last year was one of the worst on record for high yield and the brutal sell-off was precipitated by heightened uncertainty surrounding the viability of the eurozone and the strength of the global economic recovery. The negative ramifications of this for corporate earnings and default expectations led to a re-pricing of risk assets, which hit the sector hard. The experience of last year sur...