For every financial report which comes our way, the key disclaimer of “Past performance does not predict future returns” is peppered throughout the report. While we can never be certain of whether past successes would repeat themselves, past failures tend to have an uncanny habit of rearing its ugly head when we least expect it.
One of the key trends persisting over the last few years was the phenomena of investors stretching for yield as interest rates remained at record low levels.
Investors have been searching for investments opportunities which could yield them high yields. Corporations rode the wave and offered high yield corporate bonds or high dividends to attract investments from the market.
The high yields from these products served to attract investors to subscribe for these securities at the point of issue. Yet, fast forward several years later and not all has been well in the corporate bond ......