Why junk bonds deliver equity-like returns but with far inferior volatility, explains Saurabh Mukherjea

High-yield bonds, also known as junk bonds, have historically provided significant returns similar to those of the stock market, but with lower volatility. This makes them an attractive option for investors seeking to balance risk and reward in their portfolios. Saurabh Mukherjea attributes the success of junk bonds to their coupon payments, seniority in repayment, and diversification, which can help reduce overall portfolio risk. As a result, junk bonds can be a useful addition to a portfolio for those seeking to manage volatility.

Why it matters

High-yield bonds have historically delivered a large share of stock market returns with lower volatility. This makes them an attractive option for investors seeking stable returns.

Market impact

Transmission channels

Likely winners & losers

Explore the intelligence

MeridStreet does not reproduce source articles. The summary and analysis above are generated by MeridStreet from public headlines and its own market model; the original reporting belongs to Economic Times. For information only — not financial advice.