Short Duration High Yield Seen Defensive Amid Europe Crisis: Aviva’s Hughes
Aviva Investors aims to raise $5 billion for its new short duration high-yield bond fund. Aviva’s senior high yield portfolio manager Jeremy Hughes tells Bloomberg Brief’s James Crombie why the strategy works for investors seeking income without extreme volatility.
Q: Why short duration?
A: With short duration, you’ve got the benefit if spreads blow out because you’ve got low duration, but you’re also protected in an environment where interest rates rise. When you look at the total return for the high-yield asset class over the long run, over 100 percent of that is generated from coupon, so the price return actually detracts from that.