Issues to consider when investing in high yield products
~ Why is the investment high yield — where does this additional yield come from?
~ What are the main risks associated with the investment?
~ What is the risk profile attached to the different high yield instruments, and is the investment considered growth or defensive?
~ Should you make specific allocations to high yield investments, or invest in a diversified fixed income product and leave the manager to decide on the allocation to high yield?
~ What signals are relevant when considering making an allocation or increasing your allocation to high yield investments?
~ If considering a particular bond issue, ask about the price and expected yield; the maturity date, and if the bond can be redeemed early; the credit rating, and what this means for risk; and the price.
Source: Mercer Wealth Solutions
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