The Contrarian Investor Podcast
Opportunities in High Yield, Private Credit and More: AJ Giannone, Allio Capital
Mar 31, 2025
AJ Giannone, Chief Investment Officer at Allio Capital, delves into high yield and private credit opportunities, emphasizing their viability even in uncertain markets. He highlights the potential of actively managed ETFs like HYG and HYBB, while downplaying recession worries. Giannone discusses the recent accessibility of private credit to retail investors through ETFs and its diversification benefits. Additionally, he shares insights on macro signals influencing market strategies and the promising outlook for European equities.
43:17
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Quick takeaways
- High yield credit presents compelling opportunities for investors seeking attractive risk-adjusted returns, despite recession concerns and traditional market warnings.
- Private credit is becoming more accessible to retail investors through ETFs, providing enhanced risk assessment and portfolio diversification compared to high yield bonds.
Deep dives
Opportunities in High Yield Credit
Investors are exploring high yield credit as a viable opportunity, especially with increased risks and market uncertainty. Despite traditional concerns about recessions leading to high yield defaults, there are indications that credit might still offer attractive risk-adjusted returns. Recent data suggests that high yield spreads have risen, presenting a setting where investors could reasonably expect around an 8% forward return on high yield credit ETFs. It's emphasized that the focus should be on insulating against potential downsides rather than searching for companies that might experience explosive growth.
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