In this evidence-driven report, Pictet Asset Management’s credit specialists challenge misconceptions around corporate defaults and argue for a strategic revaluation of European high yield credit.
Key Insights:
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Risk-Reward Misjudged: Since 2000, European high yield bonds have outperformed equities on a risk-adjusted basis, with lower volatility and smaller drawdowns.
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Defaults Priced In: Historical returns (5.2% annualized) far outweigh default-related losses, proving investors are well compensated.
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Equities ‘Default’ More: Equity markets see higher implicit default rates than high yield credit when measured by severe price declines.
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Recovery Advantage: Bonds benefit from coupons and pull-to-par dynamics, driving superior post-drawdown returns vs. equities.
Don’t let default fear cloud opportunity, read the full report to explore high yield’s strategic potential.
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