My prediction back in nov 08 was that high yield bonds, would be the best risk/reward category for 08-09. The bond yields had gotten to high teens. The closed end bond funds were trading at 25% discount to NAV, but low volume very opaque and no public research, hence for retail market the lazy bet was quality open ended funds –
Metropolitan West High Yield Bond MWHYX
Neuberger Berman High Inc Bond Inv LBHBX
T. Rowe Price High-Yield PRHYX
Harbor High-Yield Bond Inv HYFIX
They are up 12-19% for the year; Harbor fund has the lowest risk, which makes it still a good bet now.
edit:
“Junk, or high-yield bonds, which are rated below investment grade, usually post their best gains after a market meltdown as investors snap up deeply discounted bonds in anticipation of a recovery. In 1991, a year after the bankruptcy of junk bond powerhouse Drexel Burnham Lambert, high-yield bonds clawed their way back to a 39 percent gain.”
