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Dec 06
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Despite the high risk in Junk Bonds investment, investors who invested in Junk Bonds sinces 2007 have seen high yield returns. According to Bloomberg analysis, Junk Bonds have returned 34 percent, including price gains and interest, since October 2007.
Junk Bonds have performed better than S&P 500 index
Bonds rated below investment grade have beaten the Standard & Poor’s 500-stock index by 53 percentage points since October 2007, returning 34 percent through Nov. 25, while stocks fell 19 percent.
Investors who invested in Junk Bonds of companies instead of buying shares of the companies have seen better return
The contrast is even more striking in the case of several well-known companies. Ford Motor’s 7.125 percent notes due in 2025 have risen 129 percent since Oct. 9, 2007, well ahead of the 17 percent gain by shares of the second-biggest U.S. automaker
Why Junk Bonds are Returning higher yields
Junk bonds have remained buoyant because “the bond market doesn’t believe we will have a meaningful increase in default rates,” Says Junk Bond Analyst.
have returned 34 percent, including price gains and interest, since October 2007.