Hi, I’m Jennifer Poon from the T. Rowe Price Fixed Income team.

I think global high yield deserves a place in portfolios because it’s offering something quite rare in today’s markets – attractive yields, higher than government bonds and has historically been less volatile than equities. The global high yield market is large and well established. It’s around three trillion Australian dollars in size today, with over 1500 issuers and more than 3000 individual bonds.

The high yield market originated in the U.S. during the 1970s and has since evolved into a large and global asset class. It’s actually one of the fastest growing asset classes, expanding nearly 6 times since 2000. Not only has it grown in size, but it has expanded its global reach, with opportunities across Europe and emerging markets.

Around 60% of the global high yield market is rated BB, which is just one notch below investment grade. So a large part of the market is actually closer to the higher-quality end of the spectrum within high yield.

The global high yield market gives investors a lot of choice. You’re not just limited to one country or one industry – you can build a portfolio that’s well diversified across the U.S.,Europe and emerging markets, as well as sectors ranging from healthcare, and technology to energy and consumer goods. This diversity creates more opportunities to find value. 

High yield is supported by a very stable investor base – roughly 79% is held by dedicated investors, like mutual funds, retirement funds, and insurance companies. Because these investors tend to take a long-term view and focus on income, rather than trading in and out and that helps provide more stability to the asset class over time.

So, hopefully this helps you understand a little bit more about global high yield. For more information on this exciting asset class, speak to your financial adviser.