‘Easy money’ warnings fail to prevent launches
Investors have been warned not to make excessive commitments to high yield bonds by Dutch private bank Insinger de Beaufort.
David Williams, investment manager at Insinger, said that the “easy money” from the asset class has already been made. Due to a recent tightening of spreads, leading to a less attractive risk-return ratio, Insinger portfolios have taken profits and lowered their exposure. But high yield investments are still recommended to clients due to broad economic improvements including easier capital access and better cash flow.
While many US investors have deserted the asset class, American houses continue to launch high yield funds for the European market. The latest, a Dublin-based fund from $118.5bn US manager Principal Global Investors, is so far open to investors in Germany, Ireland and the UK. The fund will follow a “risk aware strategy” rather than sliding down the credit curve into lower quality bonds.
