What to Own in the Yield Grab

I've been talking about the "yield grab" that is coming in fixed income, and I've made some suggestions about what to buy. But to judge from my Twitter feed and email responses from readers, many people aren't sure what I mean. So in today's column, we'll explore what this means, and we'll look at some off-the-beaten-path bonds that might work well.

People commonly throw around the term "reach for yield" in fixed income. The term broadly applies to any time when investors start buying poor-quality or poorly structured bonds just to get yield. This phenomenon often results in an increase in issuance of these poor bonds, and this can have greater implications. For example, reaching for yield is sometimes blamed for the proliferation of payment-in-kind (PIK) bonds or covenant-light structures....742 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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