Fixed Income Chart

High-Yield Investors Should Look Beyond US Corporates

Feb 26, 2020
1 min read
Historically, Global High Yield Has Outperformed US High Yield
Historically, Global High Yield Has Outperformed US Hugh Yield

Through December 31, 2019
Past performance and current analysis do not guarantee future results.
Global High Yield is represented by the Bloomberg Barclays Global High Yield Index (USD Hedged); US High Yield is represented but he Bloomberg Barclays US Corporate High Yield Index.
Source: Morningstar Direct and AllianceBernstein (AB)

It’s tempting to focus on US corporate bonds in a high-yield strategy. After all, the US accounts for the lion’s share of debt in the global high-yield market.

But investors who have pursued a US-only approach to high yield have missed out. History shows that the global corporate high-yield universe has delivered bigger returns than US high yield 69% of the time over the last 20 years. The average difference? Seventy basis points.

While it’s always a good time to go global in high-income investing, a late-cycle environment is a particularly good time to diversify across the world’s credit markets. After all, not every region, country or industry is at the same stage of the credit cycle.

So instead of reaching for yield by ramping up investment in CCC-rated debt, consider the benefits of diversifying globally. History is on your side.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.