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BlackRock Fixed Income Chief Strategist Jeff Rosenberg on the benefits of high-yield bonds for investors.
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Jeff Rosenberg a BlackRock is back and he's the corporate bond mind over -- speaking of which let's talk about the HYG opportunity and and tell you what's in this.
So within a tragedy is basically a sampling of everything that's in the -- of market what's the -- -- markets it's it's issues from high yield issuers from.
And GM to -- to.
TX you and energy and all sorts of companies that make up the backbone of corporate America they tend to be the higher risk companies as opposed to lower risk company so we -- -- real yields on one -- The average yield today in the high yield market -- 8%.
Hates that's why people's -- people are flocking to high yield and what's important understand in the context of investors' portfolios is while it's called the bond.
You're getting higher income but you're taking on greater equity risk high yield was -- -- equity like instrument within the fixed income world -- as you're looking at it.
In the context of your portfolio remember it's gonna have more -- relation to equity so people who are making a transition in the high yield.
Should be looking -- as an alternative to equity exposure not so much as an alternative to traditional fixed income -- What's your thought on sovereign debt to we picked out Switzerland Germany in Germany today and get both of their ten years are trading below zero the -- Of course.
Spain and Italy are skyrocketing US's ten years about one point 54%.
-- depending on what second you're looking at -- but the low within one point 4%.
Is that appropriate to invest in income.
So the front end of Switzerland and Germany two years and in -- at negative yields I think the ten years are still positive but.
The front end negative yields in sovereign Europe is really about what we've just been going through which is.
An absolute environment dominated by fear and when you have fear you're willing to pay governments to keep your money safe that we think that's a long term good investment absolutely not.
That's not where you wanna hybrid -- so what -- we tried to tell our viewers.
You might not want to do that there are better opportunities especially when you're looking -- -- and dividends absolutely and one of those good examples as what we're talking about here in corporate -- what would it be time to take a second look at US treasuries.
You mean as as an investment in part of the portfolio will again US treasuries play an important role in any portfolio because they form the ballast US treasuries -- one of the few things that go up in price.
When everything else in your portfolio goes down you want to have some of that.
In your portfolio you just wanna be careful it.
How much you have in your portfolio and what price your buying right now everybody's portfolio is different but what allocation should be you know.
Average portfolio for corporate bonds well for corporate bonds we -- -- increase in let's broaden that definition now between the two categories that you -- just asking how much interest rate risk and treasuries.
Vs corporate and coronary risk -- in court that should be today's portfolio that should be.
Two thirds of the risk in your profile of -- and only 13 and interest rate risk.
Typically people have that backwards that's the old way of investing.
Fixed income flaws with the around in the plus Jeff Rosenberg giving good advice from black Crocs fixed income department paid it got.
Trillions in assets under management good to see -- thank you they're coming --
