It’s tempting to focus on US corporate bonds in a high-yield strategy. After all, the US accounts for the lion’s share of debt in the global high-yield market.
But investors who have pursued a US-only approach to high yield have missed out. History shows that the global corporate high-yield universe has delivered bigger returns than US high yield 69% of the time over the last 20 years. The average difference? Seventy basis points.
While it’s always a good time to go global in high-income investing, a late-cycle environment is a particularly good time to diversify across the world’s credit markets. After all, not every region, country or industry is at the same stage of the credit cycle.
So instead of reaching for yield by ramping up investment in CCC-rated debt, consider the benefits of diversifying globally. History is on your side.
The views expressed herein do not constitute research, investment advice or trade recommendations, do not necessarily represent the views of all AB portfolio-management teams, and are subject to revision over time.