The U.S. Corporate-Bond Trade That’s Beating Equities This Year
- Long-dated corporates perform better than equities, junk
- Average maturity has doubled for U.S. companies’ new issues
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Last year, corporate bond fund managers feared the Federal Reserve. Now they fear low returns even more.
Investors including Loomis Sayles and Franklin Templeton are piling into longer-term company debt, the securities that offer the highest coupons but also suffer the most when yields rise. Company bonds maturing in 15 years or more are among the best performing assets of 2016, up more than 12 percent this year, according to Bank of America Merrill Lynch data. That return is clobbering three- to-five year company notes, which gained just 3.87 percent, and the S&P 500, which rose 2.94 percent. It beats even junk bonds’ 8.32 percent gains.