By Kevin Flanagan, Head of Fixed Income Strategy and Josh Shapiro, CFA, Quantitative Strategist
Our base case is that the credit cycle will not turn in 2020. Investors will likely continue to seek income in higher-yielding fixed income assets.
An important topic in credit strategy research in 2019 was the high return dispersion across corporate bond markets. Investors appear more discerning between good and bad bonds.
Given this situation, we are advocating for an up-in-quality trade for high yield (HY) investors who rely on fundamentals as opposed to credit ratings agencies.1