Time for high-yield?

By THIS IS MONEY
Updated:

 

NOW economic recovery is supposed to be on the horizon, is the time right to invest in high-yield bonds? WR, Glasgow

Colin Jackson, independent financial adviser at Baronworth Investment Services, says: It really is a case of looking at risk versus reward.

Over the last year or so, high-yield bonds have had a tough time. But if you believe that we are heading for better times ahead then you may wish to put part of your portfolio into high-yield bonds, which tend to come into their own in times of economic recovery. If you invest directly into high-yield bonds themselves and they default then you may lose everything.

You may be better off investing indirectly in them by going for a Unit Trust where the investments are spread between a wide range of bonds including high-yield bonds. If any of the Bonds within the fund default then the loss is absorbed within the fund thus minimising your loss.

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