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High yield and equities – in the same classroom?

Equities and high yield bonds follow each other wherever they go, both when it comes to fund flows and returns, as we discussed last week on this site. The Barclays Global High Yield Index even followed stocks down on Monday in the aftermath of the breakdown of talks between Greece and its creditors. So, if…


PA Europe

Strong correlation

Taking a look at Expert Investor Europe’s proprietary data, it’s immediately obvious that the correlation observed in fund flows and returns is also present in asset allocation intentions. Though European equities have constantly been more popular with European fund buyers than high yield bonds, the ‘spread’ between the two has remained remarkably consistent over time.

When less people expressed an intention to increase their allocation to European equities in the beginning of last year, the same happened for high yield bonds. Similarly, an uptick in European equity sentiment in the second half of 2014 coincided with a comparable surge in popularity of high yield bonds.