High Yield Spotlight

Even though spreads are already near all-time lows, high yield bonds remain the group of choice within the fixed income market. If the triple tailwind of tax cuts, Fed rate cuts and deregulation can keep risk assets in favor without spiking inflation again, junk bonds and riskier debt instruments could have another leg higher. The Credit Suisse Asset Management Income Fund (CIK) focuses mostly on the junk bond market, but surrounds it with enough exposure to alternative assets.

With Donald Trump winning a second term in the White House, the Trump trade has gone into hyperspeed. Trump is generally considered a pro-business, anti-regulation person, so sectors and themes that would benefit from those would be particularly attractive. One high yield CEF that stands to benefit is the First Trust Specialty Finance & Financial Opportunities Fund (FGB).

It seems like we haven’t seen it much over the past couple of years, but the traditionally negative correlation between stocks and bonds looks like it’s finally returning. Being able to buy an all-in-one product can be appealing to those who don’t want to do the research themselves. That’s the strategy of the RiverNorth Opportunities Fund (RIV). It needs to be asked whether or not this fund has the right kind of diversification.