Three reasons why it may make sense to have a long-term allocation to sub- IG credit
Institutional investors tend to have long-term investment horizons which reflect their long-term portfolio objectives. Therefore, we believe that it is important to review long term returns across asset classes when considering allocations to sub-IG credit. In this analysis we compared historical sub-IG credit to public equity and evaluated the differences between loans and high yield bonds.
Please note: this research was updated in January 2024 with the new version available here.
Our analysis uncovered 3 reasons as to why it may make sense to have a long-term allocation to sub- IG credit
- Over rolling 3-year holding periods, sub-IG credit rarely exhibits negative returns and exhibits far lower volatility than public equities, which is particularly attractive during crises such as the Global Financial Crisis (GFC)
- Longer holding periods significantly reduce how often negative return outcomes occur in sub-IG credit
- Entry points matter and today’s credit spreads signal attractive prospective returns
Our findings are drawn from the analysis provided in the full PDF.
Subscribe to our newsletters
Sign up for Regulatory News updates: click here
