By T. Rowe Price | Oct. 19, 2022
Mike Della Vedova, Co-Portfolio Manager, Global High Income Bond Fund
Stephen Marsh, Portfolio Specialist | Originally published Aug. 16, 2022
Over the past several months, the volatile, rising interest rate environment we find ourselves in hasn’t been kind to fixed income. With various economic indicators starting to turn, and inflation not yet curtailed, some investors will continue to need fixed income assets with income potential to meet their goals.
Fortunately, T. Rowe Price believes high-yield bonds are in better health than in previous downturns. Read their recent article for a look at how some of the fixed income securities held in the Canada Life Global Growth Balanced Fund and Canada Life Global Multi-Sector Fixed Income Fund are on a solid footing ahead of a potential recession.
Key insights
- As the next recession is likely to be inflation-driven rather than credit-driven, high-yield issuers appear better placed to withstand it than in previous downturns.
- Corporate balance sheets have strengthened significantly since 2020, giving high-yield issuers further support.
- The credit default cycle in 2020 was brutal, but T. Rowe Price believes it left the high-yield sector in a much better state of health.
Important information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.
The views contained herein are those of the authors as of August 2022 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. Actual future outcomes may differ materially from any forward‑looking statements made.
Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal. Fixed‑income securities are subject to credit risk, liquidity risk, call risk, and interest‑rate risk. As interest rates rise, bond prices generally fall. Investments in high‑yield bonds involve greater risk of price volatility, illiquidity, and default than higher‑rated debt securities. International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. All charts and tables are shown for illustrative purposes only.
The views expressed in this commentary are those of this investment manager as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice.
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