Have you ever been tempted to take a tactical, market-timing approach to high-yield? After all, waiting for spreads to widen and the market to become “cheap” seems like a lucrative way to play the asset class. However, history has shown us that this approach comes along with a litany of challenges, and that in reality, incremental increases in spread levels do not always translate into increases in total return.
This is the first blog of a series that is designed to provide some insight into the difficulty of applying a tactical, or short-term, mindset to high yield allocations and why, in our view, a strategic, or long-term, allocation to the asset class is optimal.
