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Glossary > Asset Class

High-yield bonds

High-yield bonds

High-yield bonds are corporate bonds issued by companies that have been given low credit ratings (BB+ or lower) by a credit-rating agency. They are not investment-grade bonds as they have a higher risk of defaulting. To offset that risk, high-yield bonds offer investors a much higher yield than better-rated bonds. Many investors choose to buy high-yield bonds through mutual funds to improve diversification and help to reduce volatility.

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