Junk Bonds an Investment Boon as Other Bonds Face Losses

Junk bonds have stood out as a boon among fixed-income investments, while other bonds have slid, a Bloomberg report has said.
Junk Bonds an Investment Boon as Other Bonds Face Losses
12/10/2010
Updated:
12/10/2010
Junk bonds have stood out as a boon among fixed-income investments, while other bonds have slid, a Bloomberg report has said.

The high-yield, but high-risk bonds that are deemed below investment grade and derisively called “junk” aren’t living up their name, as they are outpacing government-backed and even investment-grade bonds for the month of December.

Treasury notes as well as corporate and municipal bonds have averaged losses, when junk bonds have posted a modest average gain.

According to Bloomberg News, citing Bank of America Merrill Lynch index data, Treasuries dipped by 1.9 percent this month; high-grade corporate notes by 1.5 percent; and municipal notes by 1.4 percent; while junk bonds were the lone gainer with 0.8 percent.

Turning the tides of expectations, fixed-income investments with “junk” status have stood out amid the muddling results of lower-risk bonds.

“Junk bonds have benefited greatly by the fact that they’re the only place in the fixed-income world you can get some nice return,” Dan Sheppard, with Deutsche Bank AG’s Private Wealth Management unit in New York, told Bloomberg News.