Investors in need of yield should consider the risks, not just the potential return. While there are no absolute bargains in fixed income, there are at least a few segments of the bond market that offer relative value.
I continue to like U.S. high yield and tax-exempt bonds. These two asset classes offer a reasonable yield, without undue volatility. In addition, year-to-date, both have outperformed a broader fixed income benchmark, with municipals being one of the best performers so far in 2014. You can read more about why I like these fixed income sectors in my latest Investment Directions monthly market commentary.
Sources: Bloomberg, BlackRock Research
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.