Danger In Junk Bonds – Sell These Funds Today
August 19, 2016 at 06:00 AM EDT
More companies are going bankrupt now than any time since the Global Financial Crisis. This is a big problem for everyone, but nowhere is the pain more acute than in the high yield bond universe. More defaults mean more non-payments on bonds and lower prices for those bonds, causing a junk bond portfolio to fall in both value and income. For anyone who holds corporate bonds or corporate bond funds, it’s time to pay attention. Usually the market anticipates these trends and discounts bonds before the defaults spike. This happened in 2015. Investors sold junk bonds by the truck full, and a lack of liquidity was a broad market-wide issue. This also caused yields on high yield bonds to rise: Bond Rates Surged Last Year ... Read more