Does it make sense to add us high yield to a fixed income portfolio? Comparative between fixed income investiment portfolios with and without high yield

Abstract

In the last years Government debt securities in the Eurozone have been offering a very low retum with rates even close to zero, so it is becoming ineffective their inclusion in a portfolio - either to balance the risk from other more volatile assets or to use them to reliably protect savings against the inflation. In light of this, more and more people are surging into riskier debt securities: junk bonds. Through this work, we will resort to different USD debt indices to construct two fixed income portfolios and will analyze if i.ncluding US speculati.ve bonds is stati.stically si.gnificant for a moderate ri.sk profile. Throughout this process, we wi.ll always take into consideration credit qualities and amounts.