Capital Ideas Podcast

How avalanche safety training applies to high-yield debt investing

Apr 24, 2025
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INSIGHT

High Yield's Income Drives Returns

  • High-yield bonds yield an average close to broad capital market assumptions, around 6-7.5%.
  • Most of high yield's total returns come from income, making them attractive on a risk-adjusted basis.
ADVICE

Manage Risk by Evaluating Default Consequences

  • Assess both the probability of default and the loss severity when evaluating high yield bonds.
  • Adjust position size according to security's risk and potential loss to manage portfolio exposure.
ANECDOTE

Hands-On with Bankruptcy Restructuring

  • David was deeply involved in Diebold's restructuring and bankruptcy process in 2022.
  • This intense experience led to a positive turnaround and good returns for clients.
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