Knock-out: High yield vs. investment grade

High yield has outperformed investment grade for the past few years and we continue to prefer the lower-rated part of the asset class. With its shorter duration, lower sensitivity to higher government bond yields and its higher spread providing attractive carry and spread tightening opportunities, we believe high yield is better suited to stronger economic growth. Traditionally, the asset class performs best when economic expectations are on an improving trend. In investment grade, however, we like European debt, which will benefit from the lower core government bonds yields associate...