The sensitivity of high yield to government bonds is very low, an advantage of high yield in comparison to other fixed income asset classes when central banks start to normalize policies over the longer term. Learn more in this video.
Fixed income securities are subject to certain risks including, but not limited to: interest rate (changes in interest rates may cause a decline in the market value of an investment), credit (changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral), prepayment (debt issuers may repay or refinance their loans or obligations earlier than anticipated), and extension (principal repayments may not occur as quickly as anticipated, causing the expected maturity of a security to increase).
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks may be enhanced in emerging markets countries.
Non-investment-grade debt securities (high- yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities.