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Average Default Loss Rate
Western European High Yield Market
30 Sept 2018 to 30 Sept 2019
Source:
Bloomberg and Credit Suisse.
Past performance is not a reliable indicator of future performance.
You should not rely on past performance as a guarantee of future investment performance.
This chart plots the returns of key indices used by the industry to assess the performance of equities, investment grade corporate bonds, and high yield corporate bonds.
High yield corporate bonds have outperformed UK equities and investment grade bonds over the last 20 years both in terms of returns and price volatility.
Learn moreSource: Bloomberg and ICE Data Services. Data as of 18 Oct 2019.
Investors familiar with P2P but new to corporate bonds often ask - how do the returns from lending to household names (e.g. Virgin Media) stack up to the returns available from lending via P2P sites?
Using data from the leading P2P performance verification service Brismo (AltFi Data) and asset class returns from Bloomberg and ICE Data Services, we find that high yield corporate bonds have consistently outperformed the P2P platform average.
Learn more| Category | Avg Annual Return |
|---|---|
| P2P platforms Three year UK Average |
4.8% |
| £ High Yield Bonds Returns 2000 to 2019 |
10.4% |
| £ Investment Grade Bonds Returns 2000 to 2019 |
6.1% |
| UK Equities Returns 2000 to 2019 |
5.1% |
Source:
Brismo
(AltFi Data), Bloomberg and ICE Data Services.
Data as of 18 Oct 2019.
The 12 Months Default Rate measures the proportion of companies that failed to repay their bonds in the last 12 months. The lower the rate the better, and it has been in the range of 0.3-1.4% between July 2015 and Sept 2019.
Many bonds are secured, meaning they are backed by assets, which, in the event of default, will be sold to recover funds for bond holders.
The 12 Months Default Loss Rate measures the amount lost after the sale of assets to recover funds for bondholders. Between July 2015 and Sept 2019 corporate bondholders lost between 0.23% and 1% due to defaults.
Learn moreSource: Credit Suisse. Data as of 18 Oct 2019
Capital at Risk. Please remember WiseAlpha Products are investments not savings. No FSCS cover.
The European High Yield Corporate Bond Market is a large, well established, asset class which continues to develop with the market value of outstanding bonds growing from €108 billion in 2009 to €499 billion in 2019.
Source: Credit Suisse. Data as of 18 Oct 2019
With strong historical returns and low default loss rates, bonds have become increasingly sought-after among pension funds.
In 2018 UK Pension Funds allocated 53% of their portfolios to bonds, topping equities at 32% to make bonds their favorite asset class.
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