Is short duration high yield attractive today?


Focusing on shorter duration sectors in high yield in recent years produced some attractive risk return features. Is that still the case?

The returns generated by the shorter duration areas of the US and European high yield markets in recent years were achieved with generally less volatility than those from the markets across all maturities.

However, the same risk and return balance may not prevail in the years ahead. The level of yields and spreads across the maturity spectrum suggests investors may be attracted to longer maturities, in Europe at least.

Analysis suggests that investors may be better compensated investing across each high yield market than they are holding only short duration high yield.

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The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.