pathways - high yield bond fund
TRANSCRIPT
8/3/2019 Pathways - High Yield Bond Fund
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For more information on how to use High Yield Bond Funds in your portfolio, contact your advisor
John Sabourin, BA, B.Comm, FLMI, CFP
Telephone: (519) 675-1177 1-888-327-5777
Facsimile: (519) 675-1331
www.selectpath.ca
What Are High Yield Bonds?
Who Issues Them?
What Are Their Characteristics?
Debt securities of companies with low credit quality, as designated by independent bond-rating agencies.
Ratings are based on the likelihood that a corporate issuer may default. Issuers typically have higher
outstandingdebtandlesscashowtocovertheirinterestobligations.
Mature companies that operate in capital-intensive industries, such as energy, telecommunications
and utilities.
Companies in the early stages of development that lack the operating history or balance sheet strengthto merit having their debt labelled as investment grade quality.
“Fallen angels” - Companies whose debt once carried an investment-grade rating, but have been
downgraded due to doubts about the companies’ ability to pay interest or principal as promised
Yields are generally higher than those of investment-grade bonds, to compensate for higher risk.
Prices can be volatile over the short term, due to the risk factor, making this investment more
appropriate for investors with a long-term horizon.
Highyieldbondsoffertax-efcientincomethroughacombinationofinterestincomeandcapital
appreciation, ideal for investors looking for a steady income stream.
They share traits of both stocks and investment-grade bonds:
They’re like bonds because...
They provide a xed income
The bulk of their return comes fromcoupon payments
They are less volale than stocksand provide downside protecon
Absent of default, high-yield bondscan be expected to be redeemed atpar value at maturity, while stock
prices uctuate connuously
They’re like stocks because...
They tend to be less sensive to inter-est-rate movements than investment-grade bonds
They are aected by the factors that in-uence stock prices, such as the issuer’sbusiness prospects, cash ow and debtlevel, as well as industry fundamentalsand the overall health of the economy
Commissions, trailing commissions, management fees and expenses all maybe associated with mutual fund investments. Please read the prospectus beforeinvesting. Mutual funds are not guaranteed, their values change frequently andpast performance may not be repeated. The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Invest-ment Services Inc.