Developed Market Corporate Bonds Offer a Better Return Prospect Than High-Grade Bonds

Quotes from UBS:

-Developed market (DM) corporate bonds offer a better return prospect than high-grade bonds, as the additional yield will help compensate for the rise in rates.

-At current yield levels, high-grade bonds barely offset inflation while corporate bonds across the rating spectrum offer attractive additional yield. 

-To account for the changed relative attractiveness of corporate and high-grade bonds, we recommend increased long-term exposure to investment-grade corporate bonds.

-To further avoid the risks of rising interest rates, we are also focusing on bonds with a relatively short maturity of one to five years. High yield bonds offer a distinctly attractive risk-return profile, i.e. high returns at a relatively low return volatility.

Published: 2013-12-27 10:55:00 UTC+00

Developed Market Corporate Bonds Offer a Better Return Prospect Than High-Grade Bonds