What are High Yield Bonds?

High yield bonds are corporate securities with credit ratings below investment grade. Since non-investment-grade companies usually pay higher interest rates than more creditworthy borrowers, their bonds are called “high yield.” High yield bonds can be used to diversify an investment portfolio because their performance has a low correlation with investment-grade bonds such as Treasuries. Like stocks, high yield bond prices are more sensitive to the economic outlook and corporate earnings than to day-to-day interest rate fluctuations. While high yield bonds share some behavioral characteristics with stocks, their overall returns should be less volatile because their income is normally much higher.

Credit analysis is central to high yield bond investing. It focuses on individual characteristics and fundamentals of issuers as well as the downside risk of default. Portfolios of high yield bonds are diversified by industry group and issue type. Today’s vast high yield market enables portfolio managers to achieve extensive diversification by industry, issuer, as well as by the individual issue within a credit’s capital structure. By actively managing portfolios, PIMCO seeks to lower portfolio volatility while enhancing returns.

Investment Philosophy for High Yield

PIMCO's High Yield Bond Experience

Sources of Added Value

Risk Management/Controls

Who We Are

PIMCO is a global investment management firm with a singular focus on preserving and enhancing investors’ assets.

We manage investments for institutions, financial advisors and individuals. The institutions we serve include corporations, central banks, universities, endowments and foundations, and public and private pension and retirement plans. We also serve advisors and individuals set on personal financial goals, from preparing for retirement to funding higher education.

For more than four decades, our mission has been grounded in a holistic investment process designed to apply rigorous top-down and bottom-up analysis of inputs to identify investment opportunities and risks. Since our founding in Newport Beach, California, in 1971, we have grown into a team of more than 2,800 dedicated professionals, with offices across the globe and trading operations in North America, Europe and Asia. We have an established reputation of innovation, and we continue to evolve as a provider of investment solutions across all asset classes.


Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. PIMCO strategies utilize derivatives which may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Diversification does not ensure against loss.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.