The same factors driving investors back into stocks – stronger balance sheets and earnings – also make high-yield bonds more attractive for the retired or about-to-retire investor.
Since 2008, companies have reduced the size of their workforces, lowered or restructured debt, reduced inventories and strengthened their balance sheets – all of which support equities. But bonds issued by the same companies benefit from the same improvements and can deliver above-average returns with more security and much less volatility than stocks.