jswede

High Yield (Junk) Bond Funds: Past, Present and Future

"exceptional interest".... until you factor in major loss of capital in coming bankruptcies.

I'd much rather buy name by name, after exhaustive research --- there's value out there, but there's also dogs -- a fund will give you both.

High Yield Corporate Spreads Not Yet at Great Depression Levels

just visited the author's site. nowhere does he mention "High Yield" -- those brilliant SA editors added that. Also he has spread charts there.

This SA "re-post" does not do the author any favors. Try his link for a much better, if not entirely accurate, post.

High Yield Corporate Spreads Not Yet at Great Depression Levels

inflation is essentially (theoretically anyway) in the UST rates --- showing spreads over UST would give a good comparison.

Assuming chart is of the 10yr maturity:

10yr UST was ~11.5% in '83, meaning that AAA spreads were approx +300 then, and BBB was approx +550.

Today, the 10yr composite AAA yield is ~6.75% -- that's +302 over the 10yr UST currently at 3.73%. BBB yields are over 10% today, giving approx +625 spread.

During the depression, USTs did not exist. The closest benchmark would be railroad bonds - those averaged 3-4% during the 1st half of the century, and I'd guess that those are what the "AAA" curve are tracking during that time in the chart.

Using the AAA (railroad bonds) as the benchmark, the BBB spread was then about +550 at its peak during the Great Depression.

As mentioned above, neither index is high yield, both AAA and BBB are investment grade.