- Credit investing is a key way we achieve "equity returns without equity risk" in our Income Factory®.
- We begin a review of selected high-yield credit funds in the closed-end fund universe, many of which we hold in our model portfolios and in my personal portfolio.
- Credit bets are obviously less risky than equity bets, since equity risk includes credit risk ("existential" risk, the risk the company will fail, become insolvent, etc.) in it.
- That's because if the company doesn't pay its debts and goes bust, then the stock is worthless.
- Fortunately for credit investors, the reverse is not true; loan and bond holders are happy if they get paid, even if earnings drop and the stock price tanks.
For further details see:
Credit Investing: 'Equity Returns Without Equity Risk' (Part One)