BETHESDA, Md., Feb 27, 2012 (BUSINESS WIRE) -- Investors may be well served allocating a portion of their portfolio to high yield bonds in 2012 to take advantage of attractive relative returns and to provide diversification to their investment portfolios, according to Matt Duch, Lead Portfolio Manager of the Calvert High Yield Bond Fund (CYBAX) at Calvert Investment Management, Inc. Mr. Duch cites the current low-growth environment in the US coupled with favorable fundamentals for domestic corporations as support for another year during which high yield returns may be attractive.
"Headlines, both political and economic, and trading technicals have led to increased volatility in the high yield market," said Matt Duch. "That being said, we believe a well- positioned, well- researched portfolio of high yield credits should outperform most other fixed income categories, albeit at lower than average historical yield levels. Our research is pointing to another year when high yield as an asset class should outpace most other fixed income categories."
"It continues to be an especially attractive area for investors looking for income at a time when interest rates will remain at very low levels," said James Lee, Fixed-Income Analyst at Calvert Investment Management, Inc. "The benefits of adding high yield credits to your portfolio can outweigh the added risks involved by providing higher yields, and the added value of having a well balanced portfolio."
"Several factors are pointing to a favorable environment for high yield in 2012," said Cathy Roy CIO of Fixed Income. "Historically low default rates bode well for the sector as does the generally sound condition of U.S. corporations. US companies also have been strengthening balance sheets by maintaining higher levels of cash and by refinancing debt, allowing them to withstand business or economic slowdowns. Another attractive aspect of investing in US high yield is the fact that the vast majority of issuers have little to no exposure to Europe and China, two areas of the economy that have been of concern to investors."
The Fund seeks high current income in addition to capital appreciation by investing in high yield issues in sectors that represent good relative values. These companies need to have strong cash flows, sound balance sheets and a history of paying down debt.
For more information about the fund and to obtain a prospectus, please visit www.calvert.com
Investment in mutual funds involves risk, including possible loss of principal invested.
High-yield, high risk bonds, which are rated below investment grade, can involve a substantial risk of loss because they have a greater risk of issuer default and are subject to greater price volatility than investment-grade bonds.
Bond funds are subject to interest rate risk and credit risk. When interest rates rise, the value of fixed-income securities will generally fall. In addition, the credit quality of fixed-income securities may deteriorate, which could lead to default or bankruptcy of the issuer where the issuer becomes unable to pay its obligations when due.
"Headlines, both political and economic, and trading technicals have led to increased volatility in the high yield market," said Matt Duch. "That being said, we believe a well- positioned, well- researched portfolio of high yield credits should outperform most other fixed income categories, albeit at lower than average historical yield levels. Our research is pointing to another year when high yield as an asset class should outpace most other fixed income categories."
"It continues to be an especially attractive area for investors looking for income at a time when interest rates will remain at very low levels," said James Lee, Fixed-Income Analyst at Calvert Investment Management, Inc. "The benefits of adding high yield credits to your portfolio can outweigh the added risks involved by providing higher yields, and the added value of having a well balanced portfolio."
"Several factors are pointing to a favorable environment for high yield in 2012," said Cathy Roy CIO of Fixed Income. "Historically low default rates bode well for the sector as does the generally sound condition of U.S. corporations. US companies also have been strengthening balance sheets by maintaining higher levels of cash and by refinancing debt, allowing them to withstand business or economic slowdowns. Another attractive aspect of investing in US high yield is the fact that the vast majority of issuers have little to no exposure to Europe and China, two areas of the economy that have been of concern to investors."
The Fund seeks high current income in addition to capital appreciation by investing in high yield issues in sectors that represent good relative values. These companies need to have strong cash flows, sound balance sheets and a history of paying down debt.
For more information about the fund and to obtain a prospectus, please visit www.calvert.com
Investment in mutual funds involves risk, including possible loss of principal invested.
High-yield, high risk bonds, which are rated below investment grade, can involve a substantial risk of loss because they have a greater risk of issuer default and are subject to greater price volatility than investment-grade bonds.
Bond funds are subject to interest rate risk and credit risk. When interest rates rise, the value of fixed-income securities will generally fall. In addition, the credit quality of fixed-income securities may deteriorate, which could lead to default or bankruptcy of the issuer where the issuer becomes unable to pay its obligations when due.