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High-Yield Bonds: Higher Income Potential, But Default Risk is Elevated
With average yields close to 6%, high-yield bonds can offer investors an opportunity to earn more income in a very low-interest-rate world. That’s a benefit not many fixed income investments can provide. Those higher yields come with greater risks, however, and despite the strong performance recently, we believe investors should approach the market carefully because risks remain elevated. High-yield corporate bonds are defaulting at the fastest pace since the 2008-2009 financial crisis, and we expect the number of defaults to continue to climb. While the economic rebound from the lows earlier this year is a ... (full story)